September 9, 2022
Bottom Line. Seasonally adjusted weekly UI claims climbed 10 percent in August. At the same time, though, unadjusted claims fell slightly. Given the challenge of making seasonal adjustments following the pandemic, difficult to draw clear signs from August UI claims data. Overall, recent UI trends seem consistent with reports of strong employment gains statewide, despite steps by the Federal Reserve to bring inflation down.
Newest Data. New applications for unemployment insurance—so-called “initial claims”—are a useful indicator of the health of the state’s economy. As the figure below shows, after reaching unprecedented levels during the pandemic, unemployment claims have returned to their typical pre-pandemic levels. Average weekly claims during August totaled 50,800, about 10,000 claims higher than the pre-pandemic average. (We apply a “seasonal adjustment” to the weekly claims data because some weeks are predictably higher or lower than others.)
Caution Using Recent Seasonal Adjustments. Historically, our office and other observers have paid closest attention to the weekly seasonally adjusted figure. In normal times, the amount of UI claims each week fluctuates based on recurring, seasonal events like changes in the weather, holidays, and school schedules. Adjusting for these recurring events makes it easier to see the underlying trend in claims. However, the sheer number of claims during the pandemic has made calculating seasonal adjustments difficult and less reliable. As such, in addition to watching the adjusted figures, our office is also tracking trends in the underlying, unadjusted claims data. The second figure compares seasonally adjusted claims to the unadjusted, raw data.
Though Somewhat Difficult to Interpret, Recent Trends in UI Claims Consistent With Continued Strong Labor Market. Weekly seasonally adjusted claims fell to their lowest point – about 35,000 weekly claims – earlier this year. Since that time, seasonally adjusted claims have risen about 35 percent to 50,800. Yet, over the same period, unadjusted claims figures have not shown the same upward creep. Given the challenges surrounding seasonal adjustment, we caution against drawing strong conclusions from the slow up-tick in seasonally adjusted claims. Overall, incoming UI data appear consistent with continued job growth seen in the state.
The final figure shows continued UI claims—that is, the total number of unemployed workers receiving UI at any given time. Typically, initial and continued claims move together closely. If the trend in continued claims differs from the initial claims figures, this deviation could indicate that newly unemployed workers are returning to work faster (generally a sign of an improving labor market) or slower (a potential indication of a softening labor market) than in recent months. Continued claims have inched upward about 10 percent since July—rising from 290,000 to 320,000—consistent with the uptick in seasonally adjusted initial claims.