Initial jobless claims

Initial weekly unemployment claims for September 18, 2010

I hate initial weekly unemployment claims as an economic metric. It is a volatile number, subject to revisions, and has much statistical noise. That said, every single week, over and over, we are simply not seeing initial unemployment claims really drop. One has to wonder where all these people are coming from and has every single American at this point been fired from a job?

Initial weekly unemployment claims for August 14, 2010

While initial weekly unemployment claims is a volatile number, subject to revisions, today's report is not good news. Initial weekly unemployment claims hit the magic number, 500,000. From the jobless claims report:

In the week ending Aug. 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week's revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week's revised average of 474,500.

Below is the log of initial weekly unemployment claims, so one can get a better sense of the rise and fall of the numbers. A log helps remove some statistical noise. As we can see we have a step rise during the height of the recession, but then a leveling, not a similar decline and now this increase. This does not bode well for any sort of real recovery, which must include jobs.


initial claims aug 14 log


Below is a graph of initial weekly unemployment claims since November 2009. As you can see, we're literally back to 10 months ago.


initial claims aug 14 10 months


Initial weekly unemployment claims for July 31, 2010

The financial headline buzz du jour is all about initial weekly unemployment claims, which increased by 19,000. Why the U.S. jobs crisis is suddenly alarming news, when we and many other economic blogs have been sounding the alarm for years, is anybody's guess. Last week we showed, initial unemployment claims are simply too high and have stayed that way for months. Another alarming sign is the Challenger & Gray Job Cut report. Announced layoffs rose 6% from last month, the 3rd month in a row announced layoffs increased.

So far this year, the government and non-profit sector has announced 105,969 job cuts, nearly triple the next largest job-cutting sector: the pharmaceutical industry, which has announced 37,010 job cuts, 30 percent fewer than at this point last year.

Initial weekly unemployment claims for July 24, 2010

Initial weekly unemployment claims is a volatile number, subject to revisions. Regardless the below graph shows a disturbing trend in weekly initial unemployment claims, they simply are not going down to pre-recession levels. The 4-week average on initial unemployment claims is as high as April 2010.



About that weekly initial unemployment claims report

One might see blazing headlines that initial weekly unemployment claims for March 25, 2010 dropped 14,000 to 442,000. But note the below, contained in the press release:

This week's release reflects the annual revision to the weekly unemployment claims seasonal adjustment factors. The historical factors from 2005 forward have been revised.

From 2005 they revised the data? What kind of yearly seasonal adjustment is that?

Then from MarketWatch we have (looks like someone got on the phone?)

Latest figures reflect annual revisions to the data that put claims 10,000 lower than they would have been under the old methodology, a Labor official said.

Without the annual revision, claims would have totaled about 453,000

Initial weekly unemployment claims for January 25, 2010

Initial weekly unemployment claims increased 22,000 to 496,000. There is a lot of statistical noise in initial weekly unemployment claims and one can guarantee this number will be revised. So why is this important? We're seeing a trend at this point and it's increasing, not decreasing as the green shooters, cyclical folks believe it would.



The 4 week moving average since the start of this recession: