Jobless Claims: Heavy Seasonal Adjustment
July 23, 2020
Bottom Line: Claims were higher than expected again for the sixth time in seven weeks. On the plus side, though, all of the increase can be attributed to a heavy seasonal adjustment factor. Unadjusted claims fell 1.371 million from just over 1.5 million as the adjusted figure jumped from 1.3 to 1.42 million. Still, the trend is concerning as claims have stabilized at what would have been a shocking pace prior to the pandemic. Moreover, federal unemployment supplemental payments of $600 per month are set to expire at the end of the month. Additionally, anecdotal evidence suggests many businesses that benefited from PPP loans are starting to struggle again and may be forced to layoff workers. Our Nowcasting model, based on Google search data, suggests claims have ticked higher this week after bottoming two and a half weeks ago. It suggests the current week ending Saturday and reported next Thursday will be 1.41 million. Jobless Claims ROSE by 109k during the week ended July 18th to 1416k, compared with market expectations for an increase to 1300k. The 4-week average FELL by 16.5k to 1360k and the 13 week average FELL by 232.8k to 2017k. Continuing Claims FELL by 1107k during the week ended July 11st to 16,197k, after the prior week was revised moderately higher from 11,976k to 17,304k.The 4-week average FELL by 759k to 17,505k. On a non-seasonally adjusted basis, Continuing Claims FELL by 930k to 16,391k during the week ended July 4th. The Insured Jobless Rate FELL by 0.7% to 11.1% during the week ended July 11st. The insured jobless rate only reflects the number of people collecting regular state unemployment insurance.
Article by Contingent Macro Advisors