US: Jobless Claims

Thu Apr 26 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 230K 225K to 231K 209K 232K 233K
4-week Moving Average - Level 229.25K 231.25K 231.50K
New Claims - Change -24K -1K 0K

Jobless claims had been inching higher but have now moved sharply lower, down 24,000 in the April 21 week to 209,000 and the lowest level since 1969. There are no special factors to explain the move though seasonal and calendar adjustments during April, due to Easter shifts, can be uneven. The 4-week average, which smooths weekly bumps, fell only 2,250 in the week to 299,250 which is about where it was this time last month.

Continuing claims in lagging data for the April 14 week fell 29,000 to 1.837 million while the unemployment rate for insured workers remains very low, at 1.3 percent.

Employers are holding on to their employees in what is a telling sign of strength in the labor market.

Market Consensus Before Announcement
Initial claims are expected to come in at 230,000 in the April 21 week in what would be a 2,000 rise from the prior week. Readings have been edging higher though still solidly consistent with 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.