US: Jobless Claims

Thu Jun 18 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 275K 265K to 280K 267K 279K 279K
4-week Moving Average - Level 276.75K 278.75K 278.75K
New Claims - Change -12K 2K 2K

Jobless claims, after trending slightly higher in recent weeks, are back down near historic lows. Initial claims in the June 13 week fell 12,000 to 267,000 which is very near the low-end of the Econoday forecast for 265,000. The 4-week average is down 2,000 to 276,750.

The June 13 week is also the sample week for the June employment report and a comparison with the May sample week is mixed with the latest week 8,000 lower, which is a plus for the outlook, but in an offset the 4-week average is up 10,250.

Continuing claims, reported with a one week lag, reversed much of the prior week's gain with a 50,000 decline to 2.222 million. The 4-week average is 2,000 higher at 2.231 million. Both are very favorable readings. The unemployment rate for insured workers is unchanged at a very low 1.7 percent.

There are no special factors in today's report, one confirming very positive conditions on the unemployment side of the labor market.

Market Consensus Before Announcement
It's beginning to become difficult judging jobless claims because they're so low! They may rise in any given week but that means very little. The unemployment side of the labor market is as favorable as it has ever been.

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.