05 October 2013 Unemployment Claims 4 Week Average Worsens – Likely Caused by Government Shutdown

Blue Line 4 Week Average

The market was expecting 315,000 to 318,000 vs the 374,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average degraded, moving from 305,000 (reported last week) to 325,000.

It seems this sharp rise this week was caused by the knock-on effect of government shutdown.

It should be pointed out that Econintersect watches the year-over-year change on the 4 week moving average. There is some seasonality which seems to have migrated into the seasonally adjusted data, and year-over-year comparisons removes this seasonality. The initial claims are 10.9% lower (worse than the 18.8% last week) than they were in this same week in 2012.

The rate of improvement generally is equal to or better than the rate of improvement seen in 2012 (as evidenced on the above chart) – 2013 claim levels are now within 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 October 5, the advance figure for seasonally adjusted initial claims was 374,000, an increase of 66,000 from the previous week’s unrevised figure of 308,000. The 4-week moving average was 325,000, an increase of 20,000 from the previous week’s unrevised average of 305,000.

The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending September 28, unchanged from the prior week’s revised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 28 was 2,905,000, a decrease of 16,000 from the preceding week’s revised level of 2,921,000. The 4-week moving average was 2,858,750, an increase of 22,500 from the preceding week’s revised average of 2,836,250.

Weekly Initial Unemployment Claims – 4 Week Average – Seasonally Adjusted – 2011 (red line), 2012 (green line), 2013 (blue line)

Steven Hansen