US: Jobless Claims

Thu Nov 10 07:30:00 CST 2016

Consensus Consensus Range Actual Previous Revised
New Claims - Level 263K 255K to 265K 254K 265K 265K
4-week Moving Average - Level 259.75K 257.75K 258.00K
New Claims - Change -11K 7K 6K

Employers are holding tightly onto their employees as jobless claims remain steady at or near record lows. Initial claims fell 11,000 in the November 5 week to 254,000 with the 4-week average at 259,750, both in line with a slowly declining trend. Continuing claims tell the same story, at 2.041 million in lagging data for the October 29 week with the 4-week average nearly the same, at 2.040 million. The unemployment rate for insured workers is unchanged for an 8th straight week at 1.5 percent.

Next week's data for initial claims will cover the sample week of the November employment report and will be watched with special attention. There are no special factors in today's report, one that points to steady strength in the labor market.

Market Consensus Before Announcement
Initial jobless claims have been tracking at historic lows and pointing to healthy conditions in the labor market. Forecasters see initial claims falling 2,000 in the November 5 week to 263,000.

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.