US: Jobless Claims


Thu Jun 14 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous
New Claims - Level 225K 217K to 230K 218K 222K
4-week Moving Average - Level 224.25K 225.50K
New Claims - Change -4K -1K

Highlights
Jobless claims remain very low and are consistent with a low unemployment rate and strong job growth. Initial claims totaled 218,000 in the June 9 week with the 4-week average down slightly to 224,250. Continuing claims, where data lag by a week, fell a sizable 49,000 to 1.697 million with this 4-week average down 4,000 to 1.726 million. All of these readings are at or near historic lows with the 4-week average for continuing claims the lowest since December 1973. The unemployment rate for insured workers is unchanged at a very low 1.2 percent.

Market Consensus Before Announcement
Initial claims are expected to come in at 225,000 in the June 9 week vs 222,000 in the prior week. 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.