March 2018 Initial Unemployment Claims Rolling Averages Marginally Worsens?

Hurricanes continue to impact claims taking procedures in the Virgin Islands and Puerto Rico. The market expectations for weekly initial unemployment claims (from Bloomberg/Econoday) were 220 K to 230 K (consensus 228,000), and the Department of Labor reported 215,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 225,000 [this appears to be an error, and we believe the number is 223,250] (reported last week as 223,750) to 223,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 155 consecutive weeks of initial claims below 300,000, the longest streak since 1970. The general trend of the 4-week rolling average is a slowing rate of improvement year-over-year which historically suggests a slowing economy.

It should be pointed out that Econintersect watches the year-over-year change on the 4 weeks moving average. There is always some seasonality which migrates into the seasonally adjusted data, and year-over-year comparisons helps remove some seasonality. The four week rolling average of initial claims are 11.8 % lower (better than the 9.2 % lower for last week) than they were in this same week in 2016.

Claim levels are at 40-year lows (with the normal range around 350,000 weekly initial unemployment claims of levels seen historically during times of economic expansion – see chart below).

From the Department of Labor:

In the week ending March 24, the advance figure for seasonally adjusted initial claims was 215,000, a decrease of 12,000 from the previous week’s revised level. This is the lowest level for initial claims since January 27, 1973 when it was 214,000. The previous week’s level was revised down by 2,000 from 229,000 to 227,000. The 4-week moving average was 224,500, a decrease of 500 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 223,750 to 225,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 17, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 17 was 1,871,000, an increase of 35,000 from the previous week’s revised level. The previous week’s level was revised up 8,000 from 1,828,000 to 1,836,000. The 4-week moving average was 1,861,500, a decrease of 12,750 from the previous week’s revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week’s average was revised down by 6,250 from 1,880,500 to 1,874,250.