US: Jobless Claims

Thu Apr 16 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 280K 275K to 290K 294K 281K 282K
4-week Moving Average - Level 282.75K 282.25K 282.50K
New Claims - Change 12K 14K 15K

Initial claims moved higher but trends in today's report remain favorable. Initial claims rose 12,000 in the April 11 week to 294,000 vs a revised 282,000 in the prior week. But the 4-week average is little changed, up only fractionally to 282,750 which is nearly 25,000 below the month-ago comparison. This comparison points convincingly to improvement for the April employment report.

Continuing claims, reported with a week's lag, are also pointing to improvement. Continuing claims, in data for the April 4 week, fell a very sizable 40,000 to a new 15-year low of 2.268 million while the 4-week average fell 33,000 to 2.329 million. The unemployment rate for insured workers is unchanged for a third week at 1.7 percent.

There are no special factors in today's report though adjustments surrounding the Easter holidays often make for volatile week-to-week readings.

Market Consensus Before Announcement
Initial jobless claims rose 14,000 in the week to 281,000 following a slightly revised decline of 21,000 in the prior week. But the 4-week average, which helps smooth out weekly bumps, was down for a 3rd straight week, 3,000 lower to a 282,250 level that was more than 20,000 below the month-ago reading. This was a sizable improvement and hints at bounce-back strength for the April employment report.

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 smooths 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.