US: Jobless Claims

Thu Jun 21 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
New Claims - Level 220K 215K to 225K 218K 218K 221K
4-week Moving Average - Level 221.00K 224.25K 225.00K
New Claims - Change -3K -4K -1K

Jobless claims remain very low and are consistent with a low unemployment rate and strong job growth. Initial claims totaled 218,000 in the June 16 week with the 4-week average down 4,000 to 221,000 and in line with the month-ago comparison.

Continuing claims, where data lag by a week, rose 22,000 to 1.723 million but this 4-week average is also down 4,000 to 1.723 million. All of these readings are at or near historic lows with the 4-week average for continuing claims the lowest since December 1973. The unemployment rate for insured workers is unchanged at a very low 1.2 percent.

There were no states or territories estimated in the week with, for the first time since the hurricane season, no disruptions cited for Puerto Rico or the Virgin Islands.

Market Consensus Before Announcement
Vs 218,000 in the prior week, initial claims are expected to come in at 220,000 in the June 16 week which is also the sample week for the monthly employment report. All readings in this report are at or near historic lows and 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.