The Department of Labor released its latest reading on the number of people filing Initial Claims for Unemployment Insurance. Claims were down by 9k for the week, said the DOL. Any decline in Unemployment is always seen as a plus by Wall Street. After all, the fewer people filing for Unemployment, the more people continuing in their jobs, a plus for the economy.
But there is a “catch” in today’s report. The numbers by the DOL are seasonally adjusted. It is not an unusual event; the Department of Labor does this every month. And they have a good reason. Unemployment claims rise every summer, with more people leaving their jobs at this time of the year. The reasons for this are varied; people may want to take an extended vacation during the favorable weather, their job is related to education, and school is now out. But whatever the individual reason, there is an established trend toward more unemployment claims during the summer.
So the DOL reduces the number of summer claims so they don’t give a jaundiced view of the economy. In this month’s report, the DOL reduced the number of initial claims by nearly 30K. After that adjustment, weekly claims were reported to be 9K lower than last week, after that “Seasonal Adjustment.”
Unfortunately, if we use the real numbers (not “seasonally adjusted”), the actual number of initial claims for Unemployment was 257K. That’s the highest number of initial claims since the second week in January. Put another way, initial claims (257K) recorded the highest number in six months. And what’s more, the number of initial claims for this year is 20K higher than for last year (2022) at this same time.
So are the unemployment numbers getting better or worse? It all depends on the adjustment!
Reference: https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20231626.pdf
