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Thursday, April 19, 2012

Weekly Initial Unemployment Claims Numbers: Yes, No, Maybe So?

Weekly initial first-time unemployment claims were down 2,000 this week.  

But according to the "pundits", this wasn't enough of a drop and the sky is falling.. or at least, starting to fall.  From MSN:

In economic news, the number of first-time requests for jobless benefits fell by 2,000 to 386,000 during the week ended April 14 from a revised 388,000 in the previous week. Economists had expected claims to drop by 10,000 to 370,000 from the originally reported 380,000, according to economists surveyed by Thomson Reuters. The four-week moving average was 374,750, an increase of 5,500 from the previous week's 369,250. 
Bloomberg apparently also had a negative spin on the numbers.: 
More Americans than forecast filed applications for unemployment benefits last week, a sign the improvement in labor-market conditions may be stalling.  

As I mentioned last week, seasonal adjustments are a bit tricky in early April and may make the initial claims numbers seem as though they are going up when they are in fact going down... or they are at least even.

We know that, over the past two years, the unemployment rate has come down and the number of jobs along with the number of people who are employed has come up.  Layoffs are decreasing and, overall, first time unemployment claims are decreasing.  

Here's a chart showing comparisons among this year and two previous years in first-time unemployment claims in March and April:

Notice that there is a bump in the first or second week of April in all three years, and then it subsides.  Also notice how much lower the first time claims are in 2012 (red) vs. 2011 (green) vs. 2010 (blue).

But the naysayers are, as usual, just thrilled to announce something fairly neutral as negative.  Just remember, weekly claims are volatile and need to be taken with a grain of salt.     

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