US: Jobless Claims

Thu Aug 27 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 270K 268K to 275K 271K 277K 277K
4-week Moving Average - Level 272.50K 271.50K 271.50K
New Claims - Change -6K 4K 4K

Unemployment remains very low with initial claims down 6,000 in the August 22 week to 271,000. The 4-week average rose slightly in the week to 272,500 but is still slightly lower than the month-ago comparison.

Continuing claims, which are reported with a 1-week lag, rose 13,000 to a 2.269 million level which is just about where the 4-week average is, at 2.265 million for a 1,000 decline. The unemployment rate for insured workers is unchanged at a very low 1.7 percent.

All the readings in this report are very low and suggest that remaining slack in the labor market is very thin. There are no special factors in today's report.

Market Consensus Before Announcement
Initial jobless claims are expected to inch slightly lower to 274,000. With the forecast range between 268,000 and 275,000, there are no expectations that claims will break higher. Since back in March, claims data have been signaling unusually healthy 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.