US: Jobless Claims

Thu Mar 15 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 229K 225K to 235K 226K 231K 230K
4-week Moving Average - Level 221.50K 222.50K 222.25K
New Claims - Change -4K 21K 20K

Jobless claims continue to point to strength in the labor market with initial claims down 4,000 in the March 10 week to 226,000. The 4-week average, at 221,500, is down for the seventh time in the last nine weeks and is nearly 7,000 lower than it was a month ago. This is a favorable early indication for the March employment report.

Continuing claims also remain very favorable, at 1.879 million in lagging data for the March 3 week with this 4-week average down a noticeable 17,000 to a 1.891 million level that is nearly 30,000 below the month-ago comparison. The unemployment rate for insured workers remains very low, at only 1.3 percent.

There are no special factors in today's report, one that points to yet another strong monthly employment report.

Market Consensus Before Announcement
Initial claims are expected to come in at 229,000 in the March 10 week vs 231,000 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.