US: Jobless Claims

Thu Feb 22 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 230K 227K to 235K 222K 230K 229K
4-week Moving Average - Level 226K 228.50K 228.25K
New Claims - Change -7K 7K 6K

Initial jobless claims continue to post very favorable readings that remain near historical lows, at 222,000 in the February 17 week down 7,000 from the previous week's downward revised level, taking the 4-week average to 226,000, just shy of the 45-year low seen two weeks ago. The average is down about 13,500 from this time last month.

Further pointing to strength in the February employment report, continuing claims, in lagging data for the February 10 week, fell by 73,000 from the previous week to 1.875 million. The 4-week average is down 16,250 to 1.927 million, with the unemployment rate for insured workers falling 0.1 percentage points to just 1.3 percent. There are no special factors in today's report.

Market Consensus Before Announcement
Initial claims are expected to come in at 230,000 in the February 17 week which would be unchanged from the prior week. Claims have been low and 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.