US: Jobless Claims

Thu Feb 15 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 229K 225K to 230K 230K 221K 223K
4-week Moving Average - Level 228.50K 224.50K 225.00K
New Claims - Change 7K -9K -7K

Claims remain near historic lows consistent with strong demand for labor. Initial claims came in at 230,000 for the February 10 week with the 4-week average at 228,500. These levels are roughly 15,000 lower than they were at this time last month in a comparison that points to strength for the February employment report.

Continuing claims, in lagging data for the February 3 week, rose 15,000 to a still very low 1.942 million. This 4-week average is down 6,000 to 1.941 million with the unemployment rate for insured workers holding at only 1.4 percent. There are no special factors in today's report.

Market Consensus Before Announcement
Initial claims are expected to come in at 229,000 in the February 10 week compared to 221,000 in the January 27 week when the 4-week average, at 224,500, hit a 45-year low. Low levels of claims are consistent with minimal layoffs and strong 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.