New Jobless Claims: 2013 Has Been a Good Year for Seasonal Adjustment

Headlines have highlighted the fact that  new jobless claims have fallen to 335,000 and 330,000, respectively, in the past two weeks.  News reports state that new unemployment insurance claims have dropped to their lowest levels in five years.  These statements are based on seasonally adjusted data.  The following table shows seasonally adjusted and unadjusted new jobless claims data in the first three weeks of 2012 and 2013.

 

New Unemployment Insurance Claims

Date Seasonally Unadjusted Seasonally Adjusted
January 7, 2012

646,219

390,000

January 14, 2012

525,422

364,000

January 21, 2012

416,880

372,000

Avg First 3 weeks 2012

529,507

375,333

   

 

January 5, 2013

557,798

375,000

January 12, 2013

556,710

335,000

January 19, 2013

436,766

330,000

Avg First 3 weeks 2013

517,091

346,667

 The table indicates that while seasonally unadjusted new UI claims have been 2.3% lower in early 2013 than early 2012, seasonally adjusted new UI claims  dropped by 7.6% from one year ago.  The average seasonal adjustment factor in the first three weeks of 2013 reduced claims by 33% while the adjustment factor was 29% over the same three weeks in 2012.  Had the same adjustment factors been used in both 2012 and 2013, new UI claims would have averaged 366,533 per week in January 2013.

An average of 366,533 new UI claims per week is better than we have seen for much of the recovery, but it is certainly not the lowest level in the past five years.  As recently as late September and early October of 2012 the average number of seasonally adjusted new UI claims fell below 360,000 per week.  The last few weeks have seen unusually large seasonal adjustment factors making the difference between seasonally adjusted and unadjusted new UI claims larger than we have seen in recent memory.  The news on jobless claims is good, but the large seasonal adjustment may be overstating the improvement over the past few weeks.

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