| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 205K | 195K to 206K | 200K | 198K | 199K |
| Initial Claims - Change | 1K | -9K | -8K | ||
| 4-Week Moving Average | 201.5K | 205K | 205.25K |
Highlights
Claims for the latest week come in lower than expected at 200,000 versus the 205,000 figure anticipated in the Econoday consensus. That is up just 1,000 from the previous week's revised 199,000 (versus 198,000 previously reported).
The 4-week moving average is down 3,750 to 201,500 from 205,250 the week before. A moving average moving down toward a low-low 200,000 is pretty remarkable given all the talk of a weakening job market. Perhaps it is another data point suggesting a low-hire, low-fire job market as Federal Reserve officials have been saying.
Market Consensus Before Announcement
Claims are seen rebounding to the 4-week moving average at 205K after a surprising 9K drop to 198K a week ago.
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.
