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 240 K to 270 K (consensus 245,000), and the Department of Labor reported 261,000 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 241,750 (reported last week as 241,750) to 250,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 145 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 week 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 0.6 % lower (worse than the 4.7 % 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 January 6, the advance figure for seasonally adjusted initial claims was 261,000, an increase of 11,000 from the previous week’s unrevised level of 250,000. The 4-week moving average was 250,750, an increase of 9,000 from the previous week’s unrevised average of 241,750. Claims taking procedures continue to be disrupted in the Virgin Islands. The claims taking process in Puerto Rico has still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending December 30, a decrease of 0.1 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending December 30 was 1,867,000, a decrease of 35,000 from the previous week’s revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week’s level was revised down by 12,000 from 1,914,000 to 1,902,000. The 4-week moving average was 1,913,250, a decrease of 5,500 from the previous week’s revised average. The previous week’s average was revised down by 3,750 from 1,922,500 to 1,918,750.