Jobless claims: a concerning spike or just missed seasonality?
While a number of key employment market data points have shown a major weakening, a deeper look at the latest data suggests that jobless claims are not one of them.
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Initial unemployment claims move sharply higher
After bottoming in January, initial jobless claims have moved sharply higher since the beginning of May, with the latest weekly data showing initial claims of 238,000. This follows weekly claims of 243,000 in the week to 8 June, which was the highest level seen since August.
On a 4-week moving average basis initial claims rose to 232,750, also the highest level since August.
Another signal of a deteriorating labour market or just missed seasonality?
In light of the significant weakening that’s been seen in a host of job market indicators — including material and ongoing increases in the unemployment rate, falling job openings, moderating wage growth, falling hiring rates and falling quits rates (see “The latest US jobs report is not as strong as it may seem” for a detailed analysis of the latest jobs report) — many may see the recent trend in claims data as being another clear indication of a weakening labour market.
Though a deeper analysis suggests that the recent spike appears to be largely driven by seasonal factors that are being missed in the seasonal adjustment process.
This can clearly be seen when looking at the non-seasonally adjusted data that is presented in the chart below, whereby initial claims are actually tracking below levels seen at this time last year. In comparison to the 2017-19 average, claims are only modestly above levels that were seen at this time of the year.