May 19, 2011
The Unemployment Insurance Weekly Claims Report was released this morning for last week. Claims fell 29,000 from a 4,000 upward revision of the previous week. Here is the official statement from the Department of Labor:
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The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending May 7, unchanged from the prior week’s unrevised rate of 3.0 percent.
The advance number for seasonally adjusted insured unemployment during the week ending May 7 was 3,711,000, a decrease of 81,000 from the preceding week’s revised level of 3,792,000. The 4-week moving average was 3,728,250, an increase of 750 from the preceding week’s revised average of 3,727,500.
Today’s number was below the Briefing.com consensus estimate of 420,000 claims but above briefing.com’s own more optimistic 400,000.
As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (shown in the callouts) is a more useful number than the weekly data.
Occasionally I see articles critical of seasonal adjustment, especially when the non-adjusted number better suits the author’s bias. But a comparison of these two charts clearly shows extreme volatility of the non-adjusted data, and the 4-week MA gives an indication of the recurring pattern of seasonal change in the second chart (note, for example, those regular January spikes).
Because of the extreme volatility of the non-adjusted weekly data, a 52-week moving average gives a better sense of the long-term trends.
The Bureau of Labor Statistics provides an overview on seasonal adjustment here (scroll down about half way down). For more specific insight into the adjustment method, check out the BLS Seasonal Adjustment Files and Documentation.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.