A diagnostic system for determining whether a rotor shaft of a compressor is unbalanced. The compressor includes a displacement sensor that measures the displacement of the rotor shaft as it is rotating. The sensor dynamic frequency signal is sent to a bandpass filter that filters out an eigen-frequency frequency that is a function of shaft elasticity and rotor dynamics. The filtered frequency signal is then rectified by a rectifier to make the filtered frequency signal positive. The rectified signal is then passed through a low pass filter that converts the rectified signal to a DC signal. The DC signal is then sent to a controller that determines if the amplitude of the signal is above a predetermined threshold, which indicates a problem with the balance of the compressor.