US: Jobless Claims

Thu Jun 11 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 275K 270K to 280K 279K 276K 277K
4-week Moving Average - Level 278.75K 274.75K 275.00K
New Claims - Change 2K -8K -7K

Jobless claims continue to run at extremely lows with initial claims up only marginally to 279,000 in the June 6 week. The 4-week average did rise for a 3rd straight time but only by 3,750 to 278,750. This level is about in line with the month-ago comparison in a reminder that claims are so low right now, improvement is difficult to come by.

Continuing claims are also at rock bottom levels, though they did show gains in lagging data for the May 30 week. Continuing claims rose 61,000 to 2.265 million with the 4-week average up 11,000 to 2.227 million. The unemployment rate for insured workers ticked 1 tenth higher but to a still very low 1.7 percent.

There are no special factors in today's report, one that, despite increases in many readings, still points to extremely healthy conditions on the unemployment side of the labor market. Next week's report for initial claims will be very closely watched as the June 13 sample week coincides with the sample week for the monthly employment report.

Market Consensus Before Announcement
Jobless claims have been very low and are expected to stay low in the June 6 week. This report was the first to signal strength in this year's labor market. The Econoday consensus is calling for little change in initial claims, at 275,000.

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.