| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Initial Claims - Level | 230K | 225K to 240K | 231K | 232K | 233K |
| Initial Claims - Change | -2K | 4K | 5K | ||
| 4-Week Moving Average | 231.50K | 236.00K | 236.25K |
Highlights
The August employment report might not be as soft as July's results given declines in initial jobless claims which fell 2,000 in the August 24 week to 231,000. The 4-week average is down nearly 5,000 to 231,500 for the lowest level since early June.
Continuing claims in lagging data for the August 17 week rose 13,000 to 1.868 million with this 4-week average little changed at 1.863 million, which in this case is a multi-year high. Nevertheless, the unemployment rate for insured workers remains unchanged at a very low 1.2 percent where it has been since March last year.
Continuing claims in lagging data for the August 17 week rose 13,000 to 1.868 million with this 4-week average little changed at 1.863 million, which in this case is a multi-year high. Nevertheless, the unemployment rate for insured workers remains unchanged at a very low 1.2 percent where it has been since March last year.
Market Consensus Before Announcement
Jobless claims for the August 24 week are expected to come in down 2,000 at 230,000. Claims have been coming in near the 230,000 level the last several reports.
Definition
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.
Description
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 it growing, 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.
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.
