US: Jobless Claims


Thu May 03 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous
New Claims - Level 224K 220K to 230K 211K 209K
4-week Moving Average - Level 221.50K 229.25K
New Claims - Change 2K -24K

Highlights
Initial jobless claims came in at 211,000 in the April 28 week, only 2,000 higher from the prior week's 209,000 which remains a 49-year low. The latest 4-week average, down a very sizable 7,750 to 221,500, is a 45-year low. Continuing claims fell 77,000 in lagging data for the April 21 week to 1.756 million which, for this reading, is also a 45-year low. And the unemployment rate for insured employees is down another notch, 1 tenth lower to only 1.2 percent.

Trends for this series are once again moving lower, consistent with strong demand for labor in results that will firm expectations for strength in tomorrow's employment report for April.

Market Consensus Before Announcement
Initial claims are expected to come in at 224,000 in the April 28 week in what would be a 15,000 increase from the prior week which was a 49-year low. Low readings in this report are consistent with strong demand for labor.

Definition
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.



Description
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.