US: Jobless Claims

Wed Nov 25 07:30:00 CST 2015

Consensus Consensus Range Actual Previous Revised
New Claims - Level 270K 265K to 282K 260K 271K 272K
4-week Moving Average - Level 271.00K 270.75K 271.00K
New Claims - Change -12K -5K -4K

Initial jobless claims are pointing to steady strength on the unemployment side of the labor market and should support expectations for intrend strength for the November employment report. Initial claims fell 12,000 in the November 21 week to a lower-than-expected 260,000 level that is near 42-year lows. The 4-week average, however, is not pointing to outright improvement, unchanged at a 271,000 level that is trending more than 10,000 above the month-ago comparison.

And continuing claims are backing up, at least in lagging data for the November 14 week. At 2.207 million, continuing claims rose 34,000 which is the largest gain since mid-July. And the 4-week average is up 15,000 to a 2.182 million level that is also trending about 10,000 above the month-ago comparison. But in a reminder that levels remain very healthy, the unemployment rate for insured workers is unchanged at 1.6 percent.

There are no special factors in today's report which, against the outsized strength of the 271,000 nonfarm payroll gain and 5.0 percent unemployment rate in the October employment report, doesn't point to the same level of strength but does point to a respectable November employment report.

Market Consensus Before Announcement
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 holding steady in the November 14 week, up only 1,000 to a very low 270,000. Continuing claims 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 itgrowing, 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.