Reclaiming Common Sense

Are we at Peak First-time Claims for the Year?

Normally we see a peak non-seasonally adjusted first-time unemployment claims level posted during the first week of January. Sometimes we see that peak during the second week of January. This week's data is for the fifth week of December. Last year's peak was January 1, 2017. This week the data is for December 30, 2017. Do we see another uptick or does this month's December ADP report show that we may see a decline in claims next week? The non-seasonally adjusted (NSA) First-time Unemployment (FTU) claims number is what is recorded. The Seasonally Adjusted (SA) data is the headline number that is reported. The seasonal factors that are used to convert the NSA data to the SA data changes from week to week, month to month, season to season, and year to year. When data from different seasons are compared with different seasonal factors FACTs (False Assertions Considered to be True) are created. The same situation holds true for the continuing claims (CC) data, which receives very little attention in the mainstream media.

The Non-Seasonally Adjusted, and the Seasonally Adjusted, First-time Claims number edged higher from last week. This is normal. The question is: "Is this data comparable to the final week of December Data or the first week of January data?" We see a spike in unemployment claims during December and January. This level of NSA FTU claims is slightly higher than where we were during the final week of December during 2015 and 2016. We have and estimated 5.7 million more people who are covered by unemployment insurance than during December of 2015. We have 2.9 million more covered insured this year compared to December 2016. Is the 5,400 difference between 2015 and 2017 or the 1,400 claim difference between 2016 and 2017 significant?

How low should the First-time Claims data been reported? If you compare the data from this week with the final week of December from the 1960s and early 1970s we could have seen a value of 229,000 reported. If we used last year's seasonal factor the data would have been reported at 238,000. If the data from this week was adjusted using the claims data from the fifth week week of December 2000 then the reported value would have been 218,000. Look at the data. Look at the graph. This was a remarkable report.

The Fourth Week of December Continuing Claims Data popped above 2 million for the first time since August - This is normal. There are two times during the year that unemployment claims spike during the year - the End of Christmas and the End of Summer. Once again, look at the data.Last year there were a quarter of a million more unemployed workers receiving benefits during the fourth week of December. We had half a million more people receiving unemployment benefits during the fourth week of December during 2015.

The Continuing Claims Data could have been reported under 1.8 Million claims.  If the seasonal factors for the fourth week of December 2002 or 2013 were used then the seasonally adjusted data would have been reported on the high end of 1.7 million. If the seasonal factors from December 2003 or 2014 then the data would have been reported at the low end of 1.8 million. As it is, this was the lowest seasonally adjusted data for continuing claims since 2000.

This data was good data. It was remarkable data. There should be plenty of discussion on this report. The data that will be coming out within the next two weeks will give us insight into where the unemployment level in the Employment Situation report for January that will be released in February. Tomorrow's Jobs report should be a huge report. The ADP number came out strong - within the range of expectations. This could mean that momentum is building for 2018.

It's the economy.