US: Jobless Claims

Thu Aug 06 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 273K 250K to 275K 270K 267K 267K
4-week Moving Average - Level 268.25K 274.75K 274.75K
New Claims - Change 3K 12K 12K

Companies may not be hiring but jobless claims are very low, at 270,000 for initial claims in the August 1 week. The 4-week average is down for a third week in a row, 6,500 lower to a 268,250 level that is more than 10,000 below the month-ago trend.

Continuing claims, where data lag by a week, are also very low, down 14,000 in the July 25 week to 2.255 million. The 4-week average is down 18,000 to 2.239 million. The unemployment rate for insured workers is unchanged at 1.7 percent.

All the readings in this report are at or near historic lows or multi-year lows. There are no special factors in today's report.

Market Consensus Before Announcement
Jobless claims have been unusually low since March, offering highly favorable indications on the unemployment side of the labor market. Note that the prior week for this report, where the sample week was the same as the monthly employment report, points to strength for tomorrow's data on July.

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.