With the American Labor market seeing a downfall during the recent months, a ray of hope comes as the weekly unemployment rate is seen to decrease. Applications for unemployment benefits also reduced considerably.
The Labor Department that seasonally adjusts data regarding unemployment insurance initially used additive factors before COVID Pandemic but after the pandemic they used multiplicative factor. "For consistency, the published seasonal factors are presented as multiplicative with additive factors converted to implicit multiplicative factors and will not be subject to revision," the department said in a statement. "Now that the pandemic impacts on the UI claims series are clearer, modifications have been made to the outlier sets in the seasonal adjustment models for both of the claims series."
From the seasonally adjusted 228000 the state unemployment benefits reduced to 18000 with the new approach. A poll by Reuters among the economists had forecasted 200000 claims for the most recent week.
Government introduced new seasonal factors for 2023 adding that, "the most volatile economic period of the pandemic, including the period running from March 2020 to June 2021, was not revised and will continue to be based on additive adjustments."
Some of the key reasons for this change attributed by economists are the distortions during COVID pandemic, seasonal factors despite large layoffs by tech companies.
"The good news is there are no additional job layoffs after the banking panic hit in early March, but the bad news is the labor market was starting to unravel from the strongest in history even before the bank crisis," said Christopher Rupkey, chief economist at FWDBONDS in New York. "Today's jobless claims data are an additional sign that the labor market is slowing."
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