Tack on another month of no progress with weekly unemployment claims. The 4-Week moving average is still hovering around the 450,000 to 460,000 level where it was in mid-December 2009.

Please consider the Unemployment Weekly Claims Report for July 17, 2010.

In the week ending July 17, the advance figure for seasonally adjusted initial claims was 464,000, an increase of 37,000 from the previous week’s revised figure of 427,000. The 4-week moving average was 456,000, an increase of 1,250 from the previous week’s revised average of 454,750.

Weekly Claims and 4-Week Moving Averages

Last week’s improvement in claims is an outlier primarily related to seasonal discrepancies in auto manufacturing workloads. The 4-week moving average smoothes out such fluctuations and is still hovering above 450,000,

The numbers are consistent with an economy that is losing jobs.

Questions on the Weekly Claims vs. the Unemployment Rate

A question keeps popping up in emails: “How can we lose 400,000+ jobs a week and yet have the unemployment rate stay flat and the monthly jobs report show gains?”

The answer is the economy is very dynamic. People change jobs all the time. Note that from 1975 forward, the number of claims was generally above 300,000 a week, yet some months the economy added well over 250,000 jobs.

Also note that the monthly published unemployment rate is from a household survey, not a survey of payroll data from businesses. That is why the monthly “establishment survey” (a sampling of actual payroll data) is not always in alignment with changes in the unemployment rate. At economic turns the discrepancy can be wide.

It may be quite some time before we weekly claims drop to 300,000 or net hiring that exceeds +250,000.

Mike “Mish” Shedlock
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