Thursday, February 16, 2012

Seasonal Adjustment in Jobless Claims

Initial unemployment claims fell again last week to 348,000 on a seasonally adjusted basis.  The non seasonally adjusted data also painted a positive picture showing jobless claims at 361,928.  The second week of February, which is the 6th week of the year ends a period of heavy seasonal adjustment for jobless claims.  The chart below shows the average effect of seasonal adjustment to jobless claims by week of the calendar year over the last 5 years.

As the data shows, the winter months have heavy negative seasonal adjustments to claims--in other words, claims are adjusted downward.  Often claims spike for weather related reasons in the early months of the year and because of factory closures in the late months of the year.  This year the weather was more mild in most of the country, so the seasonality could have skewed comparability against prior years.  For those who are skeptical of the numbers, the coming weeks will begin to have less seasonal adjustment and therefore provide better comparability.

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