US: Jobless Claims

Thu Oct 01 07:30:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 272K 270K to 278K 277K 267K 267K
4-week Moving Average - Level 270.75K 271.75K 271.75K
New Claims - Change 10K 3K 3K

Jobless claims continue to point to rare tightness in the labor market. Though initial claims rose 10,000 in the September 26 week to a slightly higher-than-expected 277,000, the 4-week average is down 1,000 at a 270,750 level that is nearly 5,000 below the month-ago comparison.

In a special positive, continuing claims broke lower in the latest data which lag by a week. Continuing claims for the September 19 week fell a sharp 23,000 to 2.219 million with the 4-week average down 10,000 to a 2.242 million level that is nearly 20,000 below the month-ago comparison. The unemployment rate for insured workers fell 1 tenth to a very low 1.6 percent.

There are no special factors in today's report, one that may limit downside expectations for tomorrow's September employment report.

Market Consensus Before Announcement
Jobless claims are expected to rise slightly to 272,000 in the September 26 week. For the past six months, jobless claims have been signaling tight conditions in the labor market and have been offering the hawks their strongest arguments at the FOMC.

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.