US: Jobless Claims

Thu Dec 03 07:30:00 CST 2015

Consensus Consensus Range Actual Previous
New Claims - Level 269K 266K to 270K 269K 260K
4-week Moving Average - Level 269.25K 271.00K
New Claims - Change 9K -12K

Initial claims, up 9,000, did rise in the November 28 week but, at 269,000, remain near historic lows and continue to point to lack of slack in the jobs market. Still, the 4-week average, at 269,250, is trending roughly 10,000 above the month-ago trend in a comparison that does not point to further improvement for either the unemployment rate or payroll growth.

Continuing claims, where data lag by a week, are also steady and tell the same story, up 6,000 in the November 21 week to 2.161 million. The 4-week average is down 2,000 to 2.167 million and is showing very little change against the month-ago comparison. The unemployment rate for insured workers remains unchanged at a very low 1.6 percent.

There are no special factors in today's report though data for Louisiana, which is having computer troubles, had to be estimated for a second week. Today's report will not alter expectations at all for tomorrow's employment report where respectable strength is the call.

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. For the November 28 week, Econoday forecasters see initial claims giving back some of the prior week's improvement but not much, up 9,000 to what would be a still very low 269,000. It would take a reading far outside of expectations, something probably near 300,000, to upset the outlook for respectable strength in the November employment report. 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.