US: Jobless Claims

Thu Nov 09 07:30:00 CST 2017

Consensus Consensus Range Actual Previous
New Claims - Level 232K 229K to 242K 239K 229K
New Claims - Change 10K -5K
4-week Moving Average - Level 231.25K 232.50K

Initial claims for the November 4 week were up 10,000 to 239,000 and above Econoday's consensus estimate of 232,000. The four week average declined 1,250 to 231,250 the lowest point for the average since 227,750 in the March 31, 1973 week. Continuing claims were up 17,000 to 1.901 million in the October 28 week, bouncing off their recent low.

The Labor Department reported that claims taking procedures continued to be severely disrupted in the Virgin Islands while backlogged filings in Puerto Rico continued to be processed. Unadjusted claims in Puerto Rico totaled 8,137 in the current week after 6,124 in the previous week.

Seasonally adjusted insured unemployment rate rose to 1.4 percent in the October 28 week from 1.3 percent in the previous week.

Market Consensus Before Announcement
Initial claims are expected to come in at 232,000 in the November 5 week vs 233,000 in the October 28 week. Hurricane-related claims from Puerto Rico are still a wildcard.

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.