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Investors Should Keep an Eye on Initial Unemployment Insurance Claims Data
Raymond Richman, 9/22/2012

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:

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT

SEASONALLY ADJUSTED DATA

In the week ending September 15, the advance figure for seasonally adjusted initial claims was 382,000, a decrease of 3,000 from the previous week's revised figure of 385,000. The 4-week moving average was 377,750, an increase of 2,000 from the previous week's revised average of 375,750. The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending September 8, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured    unemployment during the week ending September 8 was 3,272,000, a decrease of 32,000 from the preceding week's revised level of 3,304,000. The 4-week moving average was 3,309,750, a decrease of 12,000 from the preceding week's revised average of 3,321,750.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 327,797 in the week ending September 15, an increase of 28,068 from the previous week. There were 353,820 initial claims in the comparable week in 2011.

The advance unadjusted insured unemployment rate was 2.3 percent during the week ending September 8, unchanged from the prior week's unrevised rate. The advance unadjusted number of persons claiming UI benefits in state programs totaled 2,925,518, a decrease of 5,307 from the preceding week. A year earlier, the rate was 2.6 percent and the volume was 3,306,720.

The total number of people claiming benefits in all programs for the week ending September 1 was 5,173,597, a decrease of 217,823 from the previous week. There were 6,887,930 persons claiming benefits in all programs in the comparable week in 2011.

These weekly reports are important because they are current indicators of how well the economy is doing. The figures tell us what is happening right now. Most economic data is published monthly and to get some idea of the trend requires several months of data and by the time the trend is established, the trend might have changed. Weekly data like the initial claims can confirm or contradict the trend.

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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