US: Jobless Claims

Thu Jun 04 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 276K 270K to 300K 276K 282K 284K
4-week Moving Average - Level 274.75K 271.50K 272.00K
New Claims - Change -8K 7K 9K

Jobless claims continue to run very low, down 8,000 in the May 30 week to 276,000 which is right at the Econoday consensus. The 4-week average is up slightly to 274,750 and is running about 5,000 lower than the month-ago comparison.

Continuing claims, where data lag by a week, are telling the same story, down 30,000 to 2.196 million with the 4-week average down 9,000 to 2.214 million. The unemployment rate for insured workers is down 1 tenth to a very low 1.6 percent.

All these readings are at or near 15-year lows and indicate that the unemployment side of the labor market is very favorable. There are no special factors in today's report.

Market Consensus Before Announcement
Jobless claims have been very steady at rock bottom lows. Whatever variation there has been, has been due to calendar effects and seasonal adjustments. Forecasters see initial claims holding at the high end of trend, at 276,000.

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.