Seasonally-adjusted claims below 500,000 for third week

The weekly jobless claims figure came in at 474,000. That is up 17,000 from the previous week. Revisions of the two prior weeks put the net surge at 18,000. The 4-week average is 473,750. All numbers are seasonally-adjusted.

This latest data is the highest seasonal adjustment we have seen since the stock market improved and since a technical recovery began this summer.  The actual claims were 664,865, a large number associated with normal seasonality. Because I suspected that seasonal adjustments moving in the same direction as the jobs trend (namely down) would cause the numbers to sink, I have been waiting for this week’s number as confirmation of that trend.

And we have seen a clear downshift from numbers in the 530’s in October to numbers now in the 470’s. That is a considerable move.  Moreover, 6-month (down 149,000) and 12-month (down 56, 750) comparisons of the 4-week average are favourable. Coupled with the relatively benign holiday season retail sales figures, this tells me that jobs picture, while poor, is improving and will continue to improve.

I am certainly less worried about job losses at this point. Nevertheless, 470,000 is a number still consistent with a slight loss on non-farm payrolls because hiring has not been robust. Going forward, I expect to see non-farm payrolls turn up in Q1 while employment creeps higher. A growing population and likely pro-cyclical increased labour force participation mean we need a +150k for the unemployment rate to remain stable.

We are likely to see a very slow recovery in the jobs picture through to Spring.  At that point, the cuts in local and state budgets will loom larger and we can re-assess at that juncture. My baseline is for a secondary relapse, but it is much to early to know.

Note: despite 5.1 million as the official jobless role, total unadjusted jobless claims exceeded 10 million because of the extension of unemployment benefits to those who have run out of benefits. This is testament to the weak hiring environment.

  1. barryschaeffer says


    What has been the trend with the numbers of discouraged workers who are no longer tracked by the Labor Dept (i.e. those who fall off the roles)? I would think that this would be a critical parameter to follow.


    1. Edward Harrison says

      You can track U-6 as a comprehensive measure of unemployment. It is now 17.2%. David Rosenberg believes the unusually large gap between the two cannot close by having U-6 fall. The base rate of unemployment must also rise to see a reversion to mean. That’s why he sees unemployment much higher. We’ll see.

    2. Edward Harrison says

      Barry, I also updated the post to reflect the data on those on extended benefits – now at 10 million.

  2. Brick says

    Seasonal adjustment for the same week last year was roughly 200,000 this year it is about 190,000. This compares to seasonal adjustments in the range 120,000 to 140,000 for 2003-2007 in the same week. You should expect 6 days worth of claims in the week and some lay offs in retail which I would have estimated to put the seasonal adjustment at around 150,000 maximum. I have an uneasy feeling about this seasonal adjustment number for the week. I also have a feeling that short working weeks may be playing havoc with initial claims numbers, shifting from week to week and delaying claims.

    1. Edward Harrison says

      Brick, the seasonal-adjustment factors are set far in advance as I have said before. The discrepancy has a lot to do with the size of layoffs. That number is divided by the factor and multiplied by 100. So the larger the layoff, the larger the discrepancy.

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