US: Jobless Claims

Thu Nov 12 07:30:00 CST 2015

Consensus Consensus Range Actual Previous
New Claims - Level 266K 260K to 280K 276K 276K
4-week Moving Average - Level 267.75K 262.75K
New Claims - Change 0K 16K

Initial jobless claims held unchanged at 276,000 for the highest 2-week run in two months. The 4-week average is rising, up 5,000 in the November 7 week to a 267,750 level that is, however, still in line with the month-ago comparison, a comparison that next week will match up with the October-to-November sample weeks of monthly employment data.

Continuing claims, which are lagging data for the October 31 week, are little changed, up 5,000 to 2.174 million. The 4-week average, at 2.165 million, is down about 40,000 from a month ago which is a positive signal. The unemployment rate for insured workers remains very low, at 1.6 percent.

The ratcheting higher of initial claims the last two weeks could become a concern if they fail to show improvement in next week's report, one that will be very closely watched. There are no special factors in today's report. Watch for JOLTS job opening data later today.

Market Consensus Before Announcement
Though popping higher in the October 31 week, initial jobless claims have been trending at 42-year lows and, as a share of the whole labor market, are likely at record lows. Econoday forecasters see initial claims dipping back 10,000 in the November 7 week to 266,000. Continuing claims, where data only goes back only 14 years, have also been at record 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.