US: Jobless Claims

Thu Sep 24 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous
New Claims - Level 275K 269K to 280K 267K 264K
4-week Moving Average - Level 271.75K 272.50K
New Claims - Change 3K -11K

Initial jobless claims continue to hold at near record lows, at a lower-than-expected 267,000 in the September 19 week. The 4-week average is down slightly to 271,750. There are no special factors affecting the report, one that points to tight conditions in labor supply.

Data on continuing claims lag by a week, and the latest week, the September 12 week, covers the sampling period of the monthly employment report and the comparisons are favorable. At 2.242 million, continuing claims are down nearly 25,000 from the August sample week with the 4-week average, now at 2.252 million, down nearly 15,000. The unemployment rate for insured employees is unchanged at a very low 1.7 percent.

Market Consensus Before Announcement
Jobless claims are expected to rise back to their 275,000 trend line, up from the near record low of 264,000 in the prior week. For the past six months, jobless claims have been signaling tight conditions 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.