US: Jobless Claims

Thu Sep 17 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 275K 270K to 280K 264K 275K 275K
4-week Moving Average - Level 272.50K 275.75K 275.75K
New Claims - Change -11K -6K -6K

The September 12th week may have been a shortened week for the Labor Day holiday but it is still the sampling week for the monthly employment report -- and initial claims from the week point to improvement in the labor market. Claims fell 11,000 to a 264,000 level that is one of the very lowest of the last 40 years and which is 13,000 lower than the sample week for the August employment report. The current 4-week average, at 272,500, is about even with the month-ago comparison. The sample week may be short, but today's report hints at strength for the September employment report.

Data for continuing claims, which lag by a week, are also very positive, down 26,000 in the September 5th week to 2.237 million with the 4-week average down 5,000 to 2.256 million. The unemployment rate for insured workers continues to hold at a very low 1.7 percent.

Market Consensus Before Announcement
Initial jobless claims are expected to hold steady at 275,000 in the September 12th week which is also the sample week for the September employment report. Initial claims have been holding at 40-year lows.

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.