The US Department of Labor released the employment last data point before tomorrow’s widely anticipated unemployment number comes out. The data showed jobless claims declining to 550,000 from 588,000 on a seasonally-adjusted basis. This puts the 4-week average at 555,250, the lowest average number since January. Meanwhile seasonally-adjusted continuing claims ticked up a notch to 6.3 million.
On the whole, the data do not represent any meaningful change in direction. Initial jobless claims are decreasing slowly from peak levels this past Winter but are no where close to a level that suggests the economy is adding jobs. This means that the unemployment will continue to rise for the foreseeable future.
I should note that the unadjusted data last week were very low, with initial claims at 463K and continuing claims at just under 6 million, both multi-month lows. The seasonal factors now at 84.2, will reach a low of 74.8 in early September, meaning the unadjusted data will continue to fall due to seasonality of hiring patterns (the reported number multiplies the unadjusted number by the seasonal factor and divides by 100).
Because claims are now falling with the business cycle, it makes the seasonal adjustments somewhat more distortionary to the underlying data. After Labor day, when the seasonal pattern begins to reverse and is working at odds with the business cycle trend, the underlying business cycle trend will be more clear.
Source
Unemployment Insurance Weekly Claims Report – Department of Labor