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Investors Should Keep an Eye on Initial Unemployment Insurance Claims Data
On Thursday of each week, the U.S. Bureau of Labor Statistics reports the number of initial claims for unemployment insurance filed during the preceding week. On September 20, it made its report for the week ending September 15. It reports seasonally adjusted and non-seasonally adjusted numbers. The media reported only the seasonally adjusted initial claims for the week ending September 15. They reported that the number of weekly claims was 382,000, a decrease of 3,000 from the previous week’s revised figure. The report states that the actual, not seasonally number of claims to be 327,797 an increase of 28,068 over the previous week. It is not unusual for the seasonally adjusted figures to differ in direction, an increase or decrease, and the unadjusted figure to show the opposite. The media do a disservice by reporting the seasonally adjusted figures only. Since they are reported weekly while most economic data is reported monthly or quarterly, the unemployment compensation claims data is useful in predicting where the economy is heading.
Following are the initial paragraphs of the report:
To my knowledge, the BLS does not publish a time series of the number of unemployment insurance claims filled. Investors should keep track of the data themselves. From my own time series, the last four months show no consistent trend. The data suggests that economic activity is in a sideways trend and has been for months. That does not mean the economy won’t recover or that it won’t fall off the cliff. Keeping track of the number of claims for unemployment insurance will be an early indication of the trend. Is the rise in non-seasonally adjusted the beginning of a trend? I’ll be watching closely.
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