US: Jobless Claims

Thu Sep 15 07:30:00 CDT 2016

Consensus Consensus Range Actual Previous
New Claims - Level 265K 261K to 265K 260K 259K
New Claims - Change 1.0K -4K
4-week Moving Average - Level 260.75K 261.25K

Jobless claims remain at historic lows indicating a lack of layoffs and strength in the labor market. Initial claims rose 1,000 in the September 10 week to 260,000. The 4-week average is at 260,750 which is slightly lower than the month-ago trend and a good signal for the September employment report. Continuing claims, in lagging data for the September 3 week, were little changed at 2.143 million.

Market Consensus Before Announcement
Initial jobless claims have been tracking at historic lows and pointing to lack of layoffs and healthy conditions in the labor market. Continuing claims have likewise been very 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 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.