After an increase of 30K in the prior week, initial jobless claims in the latest week declined 37K to their second lowest level in over two years. Even with the encouraging data, there are some arguing that investors should be focused more on the non-seasonally adjusted numbers. They contend that these numbers are less prone to government manipulation and therefore show a truer picture of the jobs market, and this more realistic picture shows that jobless claims are ramping.
So let's take a look at both numbers. The chart below shows weekly initial jobless claims over the last year on both a seasonally (SA) and non seasonally adjusted (NSA) basis. As shown, the current NSA number (551K) is considerably higher than the SA total of 404K. That being said, over the last week, the NSA number declined by 241K, which was the largest weekly decline since January 2002. While NSA claims are certainly higher, they are far from 'ramping.'
The timing of the argument that we should be focusing on NSA jobless claims instead of SA numbers is also curious. Call us crazy, but did anyone hear this argument being made back in the Fall during a period when NSA jobless claims were considerably lower than the SA adjusted numbers?
(Click charts to enlarge)
The chart below shows a longer term picture of the NSA initial jobless claims figure. As shown in the chart, jobless claims tend to spike in the beginning of each year and then trail off as the year goes on. What is encouraging about this chart, though, is the fact that for the second straight year, this year's peak was lower than the peak in the prior year.
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