Seasonal Adjustments Suggest Continuing Claims Rise May Be Exaggerated

Looking at weekly jobless claims data, we can get a crude sense of whether the seasonal adjustment process is helping bias latest moves in a certain direction.

• We do this by comparing weekly changes in the seasonally adjusted data with changes in NSA data vs the same period from years in more ‘normal’ periods.
• Starting with continuing claims, it suggests that today’s increase to 1834k appeared more ‘genuine’ after four weeks with an 'unfavorable' adjustment (i.e. an adjustment that has pushed SA claims higher).
• That is however following a sustained seemingly 'favorable' period through much of the year, which helped bias SA continuing claims lower (and indeed continuing claims fell from 1861k in early April to 1658k in September). This could have arisen as we came back around to periods that compared with very high readings that started to surge in Mar/Apr 2020 in the pandemic.
• Doing the same with initial claims in the charts below, note the contrast versus continuing claims, with a more balanced and smaller bias from week to week.
• One implication here is that the rise in continuing claims still likely represents a cooling in hiring - although perhaps to a lesser extent than appears the case when looking merely at the SA data on the screens.