US: Jobless Claims

Thu Jul 02 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 270K 270K to 275K 281K 271K 271K
4-week Moving Average - Level 274.75K 273.75K 273.75K
New Claims - Change 10K 3K 3K

Unemployment is very low right now, underscored by today's 2 tenths drop in the unemployment rate to 5.3 percent and by the latest in jobless claims data where initial claims came in at 281,000 in the June 27 week. This is up 10,000 from the prior week but remains very low. The 4-week average inched 1,000 higher to a 274,750 level that is little changed from the month-ago comparison.

Continuing claims, where data lag by a week, rose 15,000 to 2.264 million in the June 20 week. The 4-week average is up 15,000 to 2.253 million. These readings, like those for initial claims, are also very low. The unemployment rate for insured workers is unchanged at 1.7 percent in another reading that is very low.

There are no special factors in today's report, one that points to unusually low levels of unemployment.

Market Consensus Before Announcement
Jobless claims have been the highlight of the economic calendar all year long, signaling unusually favorable conditions on the unemployment side of the labor market. Continuing strength is expected with the consensus calling for only a small increase from 267,000 to 270,000

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.