US: Jobless Claims

Thu Jun 25 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 273K 270K to 275K 271K 267K 268K
4-week Moving Average - Level 273.75K 276.75K 277.00K
New Claims - Change 3K -12K -11K

In the latest good news out of the labor market, jobless claims are steady at historic lows with initial claims showing a small 3,000 gain to 271,000 for the June 20 week. The 4-week average is down 3,250 to a 273,750 level that, in an especially good sign, is trending slightly lower than the month-ago comparison.

Continuing claims are also near historic lows but did tick higher in the latest data which are for June 13 week. Continuing claims rose 22,000 in the week to 2.247 million with the 4-week average up 5,000 at 2.237 million. This 4-week average is trending slightly higher than a month ago. The unemployment rate for insured workers remains near a record low at 1.7 percent.

Claims levels are so low they appear to have no more room to go, at least lower. There are no special factors in today's report, one that confirms very favorable conditions on the unemployment side of the labor market.

Market Consensus Before Announcement
Jobless claims have been the highlight of economic calendar all year long, signaling unusually favorable conditions on the unemployment side of the labor market.

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.