US: Jobless Claims

Thu Apr 30 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 288K 228K to 295K 262K 295K 296K
4-week Moving Average - Level 283.75K 284.50K 285.00K
New Claims - Change -34K 1K 1K

The Fed is ready now to pull the trigger at anytime and today's jobless claims data may have their finger a little itchy. Initial claims, not skewed by special factors, plunged 34,000 in the April 25 week to 262,000 which is the lowest level since all the way back to April 2000. The 4-week average is down 1,250 to a 283,750 level which is just below a month-ago and points to improvement for the April employment report.

Continuing claims, where reporting lags by a week, are also at or near 15-year lows. In data for the April 18 week, continuing claims fell 74,000 to 2.253 million with the 4-week average down 18,000 to 2.291 million. The unemployment rate for insured workers is at 1.7 percent.

The Labor Department says there are no special factors in today's report though adjusting for weekly data surrounding Easter, which fell late in April last year, is always tricky. Still, on its face, today's report speaks to solid improvement in the labor market and to a big bounce back for the April employment report.

Market Consensus Before Announcement
Initial jobless claims were little changed in the April 18 week, up 1,000 to 295,000, but the comparison of the 4-week average, at 284,500, with the 4-week average one month ago showed an improvement of more than 20,000. This comparison matches the sampling weeks for the March and April employment reports. Continuing claims, where reporting lags by a week, were also pointing to improvement. Continuing claims for the April 11 week did rise 50,000 to 2.325 million but the 4-week average is down 22,000 to a new 15-year low of 2.309 million. This reading was down a very convincing 99,000 from the month ago comparison.

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.