US: Jobless Claims

Thu Mar 08 07:30:00 CST 2018

Consensus Consensus Range Actual Previous
New Claims - Level 220K 215K to 225K 231K 210K
4-week Moving Average - Level 222.50K 220.50K
New Claims - Change 21K -10K

Jobless claims popped higher from the prior week's 49-year low, up 21,000 to 231,000 in data for the March 3 week. The 4-week average, up 2,000 to 222,500, is still several thousand below a month ago which is a favorable comparison for tomorrow's employment report. Continuing claims, in lagging data for the February 24 week, fell a sharp 64,000 to 1.870 million with this 4-week average at 1.907 million and 40,000 below the month-ago comparison. The unemployment rate for insured workers remains very low, at only 1.3 percent.

Market Consensus Before Announcement
Initial claims are expected to come in at 220,000 in the March 3 week vs 210,000 and a 49-year low in 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.