US: Jobless Claims

Thu Nov 19 07:30:00 CST 2015

Consensus Consensus Range Actual Previous
New Claims - Level 270K 265K to 275K 271K 276K
4-week Moving Average - Level 270.75K 267.75K
New Claims - Change -5K 0K

The labor market remains solid with employment low but conditions aren't improving further, based at least on indications from jobless claims data. Initial claims fell 5,000 to a nearly as expected 271,000 in the November 14 week which was also the sample week for the November employment and a comparison with the October 17 sample week of the October employment report doesn't show improvement. The 271,000 level in the November week is up 12,000 from the October week while the 4-week average, at 270,750 vs 263,250, is up 7,500.

But levels in this report, whether improving or not, remain historically low and point to a definitive lack of slack in the available labor pool. Continuing claims, where data lag by a week, fell very slightly in the November 7 week to 2.175 million with the 4-week average up very slightly to 2.167 million. This average, unlike for initial claims, has been trending lower is down slightly from the month-ago comparison. The unemployment rate for insured workers remains at 1.6 percent which is very low.

There are no special factors in today's report though data for Louisiana was estimated. This report doesn't point to further improvement for the November employment report, against however what was a very strong October report.

Market Consensus Before Announcement
Econoday forecasters see initial jobless claims, which have risen noticeably the last two reports, slipping slightly in the November 14 week to 270,000. The week will match the sample weeks of the monthly employment reports, offering a key indication for November's data. Despite the recent rise, initial claims continue to trend at historic lows. Continuing claims have also been low.

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.