Jobless Claims: Smaller Seasonal Under New Methodology
September 3, 2020
Bottom Line: The Department of Labor implemented a new seasonal adjustment method with this week's release. Moving from a multiplicative factor to an additive one brought down the gap between the adjusted figure, most commonly reported, and the unadjusted. Multiplicative adjustments are affected by the level of the series, while additive are not. Additive are clearly more appropriate given the immense level and volatility of claims. Now at 881k on the adjusted figure and ~830k on the unadjusted figure, the seasonal factor was significantly lower last week and should be going forward. Overall, looking through these adjustments, the trend remains towards modestly lower claims as contnuing claims continued to decline. Our Nowcasting model, based on Google search data, has predicted non-seasonally adjusted claims well. And in the current week, to be reported next Thursday, it is running at 811k. Jobless Claims FELL by 130k during the week ended August 29th to 881k, compared with market expectations for an increase to 950k. The 4-week average FELL by 77.5k to 992k and the 13-week average FELL by 78.2k to 1279k. Continuing Claims FELL by 1238k during the week ended August 22nd to 13,254k, after the prior week was revised moderately lower from 17,018k to 14,492k.The 4-week average FELL by 709k to 14,496k. On a non-seasonally adjusted basis, Continuing Claims FELL by 765k to 13,104k during the week ended August 15th. The Insured Jobless Rate FELL by 0.8% to 9.1% during the week ended August 22nd. The insured jobless rate only reflects the number of people collecting regular state unemployment insurance.
Article by Contingent Macro Advisors