US: Jobless Claims

Thu Mar 01 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 230K 226K to 240K 210K 222K 220K
4-week Moving Average - Level 220.50K 226K 225.50K
New Claims - Change -10K -7K -9K

Today's personal income & outlays report points to economic health as do initial jobless claims, down 10,000 in the February 24 week to a lower-than-expected 210,000 for the best reading in 49 years. The 4-week average is at 220,500 and is trending roughly 15,000 lower than the month-ago comparison which points at increasing strength for the February employment report.

Continuing claims, however, did rise 57,000 in lagging data for the February 17 week though the 4-week average is down slightly at a 1.920 million level which is slightly lower than the month-ago comparison. The unemployment rate for insured workers is at a very low 1.4 percent.

Claims are low which means layoffs are minimal and demand for labor strong, further confirmation that the economy is at or very near full employment.

Market Consensus Before Announcement
Initial claims are expected to come in at 230,000 in the February 17 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.