Seasonally Adjusted Claims Data Improves, Non-Seasonally Adjusted Deteriorates, Snow Again Involved

Today's BLS release on initial claims showed a moderate improvement in SA initial claims, which declined by29,000 from 498,000 to 469,000, which lead to a just noticeable improvement in the 4-week average, and a 134,000 decline in the SA unemployment to 4.5 million. Yet this week once again saw a divergence between the SA and NSA numbers, where NSA initial claims increased by 17,128, and SA unemployed went up by 24,534 to 5.6 million. The spread in the SA and NSA unemployment rates, after tightening for 4 weeks, has once again started to diverge, and was at 80 bps, after hitting a 2010 tight of 70 bps in the week ended February 13.

As for the extremely volatile (and delayed) Emergency Unemployment Compensation series, that increased by 207,632 in the week ended February 13. Oddly enough, snow storms were once again implicated, this time for claims "renormalization", even though the data, which was from the last week of February, was accompanied by some of the largest snowstorms at precisely that time.

Some commentary from Goldman on claims:

1. As expected, initial claims fell by 29k in the week of Feb 27 to reach 469k. The pattern of recent weeks -- down in early Feb as storms first hit, then up as some workers were unexpectedly idled -- is consistent with weather effects. The latest decline suggests that these effects have abated. That said, the four-week average - which should cut through most of these disturbances -- remains at the elevated level of 471k.

2. Continuing claims fell by 134k in the week of 20 Feb to 4.5million, 100k lower than expected. Extended claims continue their recent up and down pattern, rising by 198k in the week of Feb 13, after a 335k drop in the week before. The total number of claims - the sum of continuing and extended - remains on a slight upward track through mid Feb, rising to 10.5 million.

3. The Q4 productivity and cost revisions contained no major surprises. The increase in productivity was a bit larger than our above-median forecast as the Labor Department shaved its initial estimate of hours worked a bit. Unit labor costs now show a much steeper decline - down 4.7% over the past four quarters versus 2.8% previously - as more comprehensive data on labor compensation have proven to be much weaker than indicated by preliminary reports.

The fact that the country is still losing employees, almost half a year "after the recession ended", seems to be getting zero air time.