US: Jobless Claims

Thu May 28 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 270K 265K to 275K 282K 274K 275K
4-week Moving Average - Level 271.50K 266.25K 266.50K
New Claims - Change 7K 10K 11K

Initial jobless claims rose 7,000 in the May 23 week but at 282,000 remain very low as does the 4-week average which rose 5,000 to 271,500 and is trending about 10,000 lower than the-month ago comparison.

Continuing claims, up 11,000 in trailing data for the May 16 week, are also very low at 2.222 million. The 4-week average fell 9,000 to 2.221 million and is trending about 50,000 below the month-ago comparison. The unemployment rate for insured workers, after hitting a long-term low in the prior week at 1.6 percent, rose 1 tenth to 1.7 percent.

There are no special factors in today's report, one that, despite some increases in the latest week, still points decidedly at gains for the May employment report.

Market Consensus Before Announcement
Initial jobless claims are signaling great strength in the labor market, at least signaling that layoffs are at record lows. Continuing claims have been sending the same signal. Further improvement in this report has been pointing to further declines for the unemployment rate.

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.