US: Jobless Claims

Thu Mar 19 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 293K 275K to 305K 291K 289K 290K
New Claims - Change 1K -36K -35K
4-week Moving Average - Level 304.75K 302.25K 302.50K

Respectable nonfarm payroll growth of at least 200,000 is likely in store for March based on mostly steady indications from initial jobless claims which inched 1,000 higher in the March 14 week to 291,000 with the 4-week average up a modest 2,250 to 304,750.

The latest week's data are of special importance given that the week is also the sample week for the March employment report. Comparisons with the sample week in February show a 9,000 rise (291,000 vs 282,000) but a steeper 21,750 rise for the 4-week average (304,750 vs 283,000). Though these readings don't point to improvement for nonfarm payroll growth in March, the comparison with February is unusually hard, at plus 295,000.

Continuing claims, which are reported with a 1-week lag, fell 11,000 to 2.417 million in data for the March 7 week with the 4-week average down 1,000 to 2.418 million. Like initial claims, continuing claims have been mostly steady so far this year. The unemployment rate for insured workers is unchanged at a recovery low of 1.8 percent.

There are no special factors in today's report, one that points to steady but not spectacular growth for the labor market.

Market Consensus Before Announcement
Initial jobless claims fell a very steep 36,000 in the March 7 week to 289,000, driving down the 4-week average by 3,750 to a 302,250 level that, however, is more than 10,000 above the month-ago comparison. The month-on-month comparison does not point to improvement for the March employment report. Continuing claims, which are reported with a 1-week lag, are mixed, down 5,000 in data for the February 28 week to 2.418 million but with the 4-week average up 13,000 to 2.417 million. The month-on-month comparison for the average is up 20,000, again not pointing to improvement for the labor market. The unemployment rate for insured workers is unchanged at a recovery low of 1.8 percent.

New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment
benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with
an income that gives a household spending power. Spending greases the wheels of the economy and keeps it
growing, so a stronger job market generates a healthier economy.

There's a downside to it, though. Unemployment claims, and therefore the number of job seekers, can fall to such
a low level that businesses have a tough time finding new workers. They might have to pay overtime wages to
current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because
of a shortage of workers. This leads to wage inflation, which is bad news for the stock and bond markets. Federal
Reserve officials are always on the look-out for inflationary pressures.

By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation looks threatening, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked jobless claims and adjusted their portfolios to anticipate these events.

Just remember, the lower the number of unemployment claims, the stronger the job market, and vice versa.