The Department of Labor released their advanced estimates of initial and continuing unemployment insurance claims this morning. Initial claims came in at a seasonally adjusted rate of 339,000, an increase of 16,000 from the revised 355,000 of the prior week. Initial claims peaked at 670,000 in the last week of March 2009, and, up until recent months, have been in a downward trend, with the decline from peak to trough standing at about 49% (down 331,000).
Moving in the same general direction as initial claims, continuing unemployment insurance came in yesterday at an even 3 million. Continuing claims peaked in the final week of May 2009 at 6.635 million. Since then, continuing claims have declined by 3.635 million, or about 55%.
The question is: are the initial figures encouraging signs or simply statistical noise in an already bottomed out data series (meaning, claims are now on an upward trajectory)?
Looking at the initial claims figures, the current advanced estimate of 339,000 puts the initial claims figure at about 5,000 above its recent bottoming of 334,0000 in the second week of March. Since that week, four out of the six weeks have posted discouraging signs of labor market improvement, with the largest week over week increase of 31,000 in the final week of March (Easter played a role in the end of March/first week of April volatility).
With this recent trend background in mind, the overarching trend since March 2009 has been continued improvement in the initial claims figures with merely the occasional weekly statistical noise has been the experience.
Is the experience over the past six weeks simply statistical noise or is yesterday’s figure simply statistical noise at the beginning of an inflection point?
It’s certainly true that six weeks of initial claims figures does not make for sufficient evidence of a broad trend. For instance, initial claims performed poorly for April and May of 2011 as well as November of 2012.
In any event, one thing is for sure: initial claims are floating below their long-term linear trend line.
Overall, initial claims came in at 339,000 yesterday, a decrease of 16,000 over the prior week, while continuing claims came in at an even 3 million, a decrease of 93,000 over last week. The question is whether this week’s figures are simply statistical noise in the inflection point story or whether yesterday’s figures are indicative of continued labor market improvement.