Over the last few weeks, my travels have put me out of touch with the weekly initial jobless claims metric, although I know Steve Eggleston kept Hot Air readers up to date on it. In October, the level of new claims went below the 300K barrier, at least momentarily. Today, however, it’s back up to 379,000, about where it was eight months ago:
In the week ending December 14, the advance figure for seasonally adjusted initial claims was 379,000, an increase of 10,000 from the previous week’s figure of 369,000. The 4-week moving average was 343,500, an increase of 13,250 from the previous week’s revised average of 330,250.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending December 7, an increase of 0.1 percentage point from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemploymentduring the week ending December 7 was 2,884,000, an increase of 94,000 from the preceding week’s revised level of 2,790,000. The 4-week moving average was 2,799,000, an increase of 4,250 from the preceding week’s revised average of 2,794,750.
It’s the jump in the four-week rolling average that’s most troubling here. This metric is at best an imperfectly correlative measure of job creation, where single-week figures mean nearly nothing but the long-range trends track economic growth fairly well. The four-week average doesn’t usually move by 13K claims in a week, and it’s difficult to see what the impetus for this might be. The economy hasn’t had a real shock over the last few months, and there isn’t a horizon event (like a tax hike) that would explain it.
The Associated Press says that layoffs are spiking nonetheless:
Applications are a proxy for layoffs. Last month, they fell to nearly the lowest level in six years, as companies cut fewer jobs. But two weeks ago, they surged 64,000 to 369,000.
Economists dismissed the spike, saying it likely reflected a later the Thanksgiving holiday, which can distort the government’s seasonal adjustments. But if the trend continues it would be a troubling sign of rising layoffs.
The issue of seasonal adjustments might be valid. The raw, unadjusted figure for claims is actually higher at 414,002, but that’s a decline from last week of 48,196 claims. That explanation only goes so far, though. Last year in the same week, the not-seasonally-adjusted figure was 410,429, and the adjusted figure was 366K, both lower than this year’s numbers, and the downward adjustment in this week wouldn’t be sharper than last year’s.
Sometimes this volatility comes from estimates rather than hard figures from the states, but Reuters says that’s not the case in this report:
Economists polled by Reuters had expected first-time applications to fall to 334,000 last week.
The four-week moving average for new claims, which irons out week-to-week volatility, increased 13,250 to 343,500.
Claims data continue to be plagued by seasonal volatility. Other labor market indicators have pointed to a strengthening in job growth. …
A Labor Department analyst said no states had been estimated, but noted that claims were still in a period of volatility related to the holidays.
But that’s what the 4-week average is supposed to eliminate or at least reduce, and that went sharply upward, too, thanks to the results of the last two weeks. We’ll see soon enough, of course, and it’s best to remember that this is a metric that really only works in a series, not just a single report. The Fed bet big yesterday on job creation with its taper on quantitative easing, and we’ll see whether they have to hedge that bet next year.