US: Jobless Claims

Thu Mar 31 07:30:00 CDT 2016

Consensus Consensus Range Actual Previous
New Claims - Level 266K 260K to 275K 276K 265K
4-week Moving Average - Level 263.25K 259.75K
New Claims - Change 11K 6K

Jobless claims did rise in the latest week but remain at or near all-time lows. Initial claims rose 11,000 in the March 26 week to 276,000 with the 4-week average up 3,500 to a 263,250 level that is only marginally above recent trend. Continuing claims, in lagging data for the March 19 week, fell 7,000 to 2.173 million with the 4-week average down 14,000 to 2.191 million. These readings show tangible improvement from trend. The unemployment rate for insured workers is unchanged at a very low 1.6 percent. There are no special factors in today's report, one that confirms ongoing strength in the labor market heading into tomorrow's monthly employment report.

Market Consensus Before Announcement
Initial jobless claims are holding steady near record lows and are pointing to another month of solid employment growth for March. The Econoday consensus for the March 26th week is 266,000 which would be an increase of only 3,000 from the March 19th week. Continuing claims, like initial claims, have also been holding at historic 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.