US: Jobless Claims

Thu Aug 13 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 270K 260K to 272K 274K 270K 269K
4-week Moving Average - Level 266.25K 268.25K 268.00K
New Claims - Change 5K 3K 2K

Jobless claims continue to hold at historically low levels, at 274,000 in the August 8 week. The 4-week average is down 1,750 to 266,250 and is nearly 15,000 below the month-ago comparison in what is a positive indication for the August employment report.

Continuing claims, which are reported with a week's lag, rose 15,000 in data for the August 1 week to 2.273 million. The 4-week average is up 14,000 to a 2.254 million level that is about 10,000 lower than the month-ago comparison. The unemployment rate for insured employees is unchanged at a very low 1.7 percent.

The unemployment side of the labor market is very healthy and, for policy makers, is very tight, justifying perhaps a rate hike at the September FOMC.

Market Consensus Before Announcement
Jobless claims are expected to hold at rock bottom levels, at 270,000 for initial claims in the August 8th week. Data throughout this report are at or near historic lows and point to lack of slack in 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.