US: Jobless Claims

Thu Apr 27 07:30:00 CDT 2017

Consensus Consensus Range Actual Previous Revised
New Claims - Level 244K 240K to 245K 257K 244K 243K
4-week Moving Average - Level 242.25K 243.00K 242.75K
New Claims - Change 14K 10K 9K

Initial jobless claims rose 14,000 in the April 22 week to a higher-than-expected 257,000. Yet, at 242,250, the 4-week average is now slightly lower and compares well with the 250,000 levels of late March. Continuing claims, in lagging data for the April 15 week, rose slightly to 1.988 million and with this 4-week average also moving lower, to 2.007 million and a new 17-year low. The unemployment rate for insured workers (excludes job leavers and re-entrants) remains at a very low 1.4 percent.

Claims data can be uneven during holiday periods such as Easter. But the 4-week averages are solid evidence that the labor market has remained very healthy this month in what is a positive indication for tomorrow's employment report. There are no special factors in today's report though Louisiana once again had to be estimated.

Market Consensus Before Announcement
Initial jobless claims are expected to hold steady in the April 22 week, at a consensus 244,000 in what would be no change from the prior week. Unemployment claims have been very low and favorable the past couple of years and are indicating strong employer demand for labor.

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.