- by New Deal democrat
This week’s update of initial and continuing jobless claims is a demonstration of two frames of seasonality: one in the immediate term, and one longer term stretching back several years. When we parse them out together, they suggest there may have been somewhat of a regime change that began in July and is still ongoing.
Let’s start as usual with the raw numbers. Initial claims rebounded from last week’s near 50 year low by 44,000 to 236,000. The four week moving average, which irons out most of this seasonality, rose 2,000 to 216,250. Continuing claims, which it is especially important this week to note lag one week, declined dramatically, by -99,000 to 1.838 million, the lowest since early April:
Of course, the prior week was Thanksgiving, and as I wrote last week, the seasonal adjustment “expects” a big decline, but this year’s was even bigger. I expected a rebound this week, and we got it. Next week I expect a similar rebound in continuing claims.
That’s the immediate term seasonality issue.
But this week the graph above covers not just my usual frame of two years, but three years, to show that a regime change may be afoot. That’s because in the immediate post-pandemic years of 2023 and 2024, there were apparent pandemic related unresolved seasonality issues: claims rose from January until mid-year, and then declined during the second half of the year until the next January. This year the unresolved seasonality has been much more muted, especially in the second half of this year. Claims did rise into June, but then sharply declined in July, and have generally remained in that range since.
Of course, seasonality issues should be negated in the YoY% comparisons, which as I always point out, is more important for forecasting purposes. There, initial claims were lower by -1.3% this week, the four week average by -3.2%, and continuing claims by -1.9%:
As per usual, I score this as a positive, as this is what happens during expansions. In other words, it forecasts no recession in the very near term, which is good news compared with some other data we have recently received, including the JOLTS report for September I wrote about on Tuesday.
Additionally, because jobless claims lead the unemployment rate, our usual look suggests that there is no upward pressure on that rate, and if anything there is an increased likelihood of a small decline in the unemployment rate in the next several months:
That’s good news. And that plays into the possibility of a regime change in the trend in claims since the middle of this year.
Below is a graph of the YoY change in the actual number of initial claims filed plotted both weekly (thinner, gray) and monthly (thicker, blue) in 2025:
In the first half of this year, jobless claims typically were in the +10,000 range YoY. That all changed since the end of June. In the 23 weeks since, jobless claims have averaged just under -4,000 lower YoY. While I speculated during the summer that the change was school year related, and indeed there was payback in the form of sharply higher numbers early in September, the trend of lower YoY numbers has continued, even against the comparisons of very low numbers at this time last year (remember the residual seasonality of 2023-24 meant low numbers in December into January).
This suggests to me that the post-pandemic residual seasonality has been evaporating in large part, and further it is evidence, contrary to most of the monthly data we have gotten this year - including most recently from both the regional Feds and the ISM as I have documented in the last few weeks - that have suggested that the labor market may have tipped over. Instead, initial claims may point to at least a slight recovery.
Weekly data is noisy, but it always captures trend changes first. While the official monthly government data is still stale, I will pay especially attention to the regional Feds reports on employment trends in their districts, the first of which is scheduled to be released on Monday.
