Jobless Claims: Big Seasonal Adjustment, Unadjusted Sub-850k
August 27, 2020
Bottom Line: Initial claims were still over a million, mostly due to large seasonal adjustments. Unadjusted claims were down to 822k. Importantly, the Department of Labor announced they will change its seasonal adjustment method with next week's release. Moving from a multiplicative factor to an additive one will bring 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. 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 732k, a new post-pandemic low. Jobless Claims FELL by 98k during the week ended August 22nd to 1006k, compared with market expectations for an increase to 1000k. The 4-week average FELL by 107.3k to 1068k and the 13 week average FELL by 85.9k to 1357k. Continuing Claims FELL by 223k during the week ended August 15th to 14,535k, after the prior week was revised moderately lower from 17,018k to 14,758k.The 4-week average FELL by 604k to 15,216k. On a non-seasonally adjusted basis, Continuing Claims FELL by 936k to 14,265k during the week ended August 8th. The Insured Jobless Rate FELL by 0.4% to 10.2% during the week ended August 15th. The insured jobless rate only reflects the number of people collecting regular state unemployment insurance.
Article by Contingent Macro Advisors