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Before the pandemic, the unemployment insurance claims series was adjusted using multiplicative models. However, starting from March 2020, BLS staff changed the seasonal adjustment models to additive as the pandemic had a large effect on the UI series. As the pandemic’s impact lessened, the seasonal adjustment models were changed back to multiplicative models.
During the pandemic period, the UI series will be treated as a hybrid adjustment, with additive adjustments used for the most volatile period, i.e., March 2020 to June 2021, and multiplicative adjustments used before and after that period. The published seasonal factors will be presented as multiplicative, with additive factors converted to implicit multiplicative factors, and will not be subject to revision.
In order to provide a more accurate picture of claims levels and patterns for both initial and continued claims, modifications have been made to the outlier sets in the seasonal adjustment models for both of the claims series. As a result, there have been larger than usual revisions during many weeks over the last five years. These changes, however, should provide a more accurate understanding of claims levels and patterns
For a while, bad economic news was viewed positively by the market as it lowered the outlook for further Fed rate hikes. However, with the end of the Fed’s rate increase cycle appearing to be near, investors are once again viewing bad news as simply bad news. It remains to be seen what impact, if any, this latest economic data will have on tomorrow’s March jobs report
What to look out for in tomorrow’s jobs report
An unemployment rate below 200,000 would likely be seen as favorable news for the economy, suggesting the Fed may pause interest rate increases in the near future. However, it is important to note that wage growth is another crucial aspect to consider. Higher-than-expected wage increases may reinforce the idea that the labor market could become a source of inflation, as companies may have to raise prices to keep up with increased labor costs.
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