US: Jobless Claims

Thu Sep 03 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 273K 268K to 278K 282K 271K 270K
4-week Moving Average - Level 275.50K 272.50K 272.25K
New Claims - Change 12K -6K -7K

Initial jobless claims moved up but are still in their range and historically at rock bottom levels. Initial claims rose 12,000 in the August 29 week to 282,000 which is above the Econoday high estimate and is the highest reading since early July. The 4-week average, up 3,250 to 275,500, is at its highest level since the middle of July and is trending more than 5,000 above the month-ago comparison.

Continuing claims, where data lag by a week, fell 9,000 in the August 22 week to 2.257 million. The 4-week average is 1,000 lower at 2.264 million which is about 25,000 higher than the month-ago comparison. The unemployment rate for insured workers remains at a very low 1.7 percent.

There are no special factors in today's report, one that supports concerns, at least to a degree, over the economic impact of market volatility. Today's report, though outside the mid-month sample period of the August employment report, will not raise expectations for strength in tomorrow's data.

Market Consensus Before Announcement
Initial jobless claims have been very low this year, pointing to very thin layoff activity. Claims are expected to hold near recent levels, at 273,000 in the August 29 week.

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.