US: Jobless Claims

Thu Mar 09 07:30:00 CST 2017

Consensus Consensus Range Actual Previous
New Claims - Level 238K 234K to 240K 243K 223K
4-week Moving Average - Level 236.50K 234.25K
New Claims - Change 20K -19K

Initial claims rose 20,000 in the March 4 week to a higher-than-expected 243,000 but the data remain very favorable for the labor market. The weekly rise, which comes off a deep low of 223,000 in the prior week, lifts the 4-week average slightly to a 236,500 level which is still nearly 10,000 below the month-ago comparison.

Continuing claims, in lagging data for the February 25 week, also remain very favorable, down 6,000 to 2.058 million. This 4-week average is also down slightly to 2.066 million which is also trending lower. The unemployment rate for insured workers is unchanged at a very low 1.5 percent.

Putting week-to-week swings aside, unemployment claims are remarkably low and point to strong demand for labor which is good news going into tomorrow's employment report for February. There are no special factors in today's report.

Market Consensus Before Announcement
Initial jobless claims have remained very favorable, at new 40-year lows and running more than 5,000 below January's levels which points to strength for the February employment report. Continuing claims have also been coming down, running about 20,000 below a month ago. Forecasters are calling for an increase from the prior week's cycle low of 223,000 in initial claims, at a consensus 238,000 for the March 4 week.

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.