Jobless claims fall to lowest this year
From the U.S. Department of Labor:
In the week ending Nov. 28, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s revised figure of 462,000. The 4-week moving average was 481,250, a decrease of 14,250 from the previous week’s revised average of 495,500.
As I said last week, I am expecting this new lower level of claims to hold because I believe seasonal adjustments were distorting the claims numbers in September and October. This past week, the unadjusted claims number was 460,989. So for those of you of an apocalyptic mindset, we can’t look at this week’s lower number as a complete aberration (Thanksgiving does skew data lower though).
I should also mention that previous week claims are now being revised down instead of up. I noticed this last week when the 505,000 number was revised down to 501,000. and it continued this week, with the previous 466,000 number revised down to 462,000. Downward revisions are always welcome.
Let’s be honest, these are enormous numbers. But 425,000-450,000 job losses is probably consistent with a zero non-farm payroll number. If these levels hold, we cold see non-farm payrolls increase early next year. Note that increases in the labour force as the population grows and discouraged workers re-enter means the unemployment rate would still continue to increase.
I am not tracking continuing claims because they fail to incorporate all the people exhausting unemployment insurance. Though they are also down.
On the whole, this report is what I expected. Let’s hope these numbers continue to drop. Job losses will then be less of a concern. Hiring is where we need to be worried.
Last weeks enormous seasonal adjustment of 80,000 jobs has gone this week which shows they have made some adjustments to their seasonal adjustment model. What we should probably take into account is the fact that normally during this week retailers take on short term staff for the holiday season. We also have auto manufacturers adjusting their lay off periods. Note thate EUC 2008 claims are up again. Certainly a better report but seasonal factors may have played a part and there are virtually no job gains despite the dollar decline.
Brick, the seasonal adjustments are devised a year in advance. I had a spreadsheet of all the seasonal adjustment index through to the end of the year before 2009 began. So when I indicated in an earlier post that 140.2 this coming week would be this Fall’s high for adjustment’s, I was using this data.
https://www.ows.doleta.gov/unemploy/wkclaims/report.asp
My point is this: the downturn has been more severe than anticipated, therefore the adjustment factors, which were made well in advance, are likely to be off. Now that we are in recovery mode, they are likely to overstate claims.