| Consensus | Consensus Range | Actual | Previous | |
| Initial Claims - Level | 212K | 208K to 219K | 231K | 209K |
| Initial Claims - Change | 22K | -1K | ||
| 4-Week Moving Average | 212.25K | 206.25K |
Highlights
Initial claims numbers for last week surprised to the high side but did not rise enough to shake the view that employment conditions have stabilized at a slow hiring pace coupled with a low level of layoffs. Continuing claims have come in below 1.9 million for four straight weeks, as employers' 'no-hire, no-fire' approach remains entrenched.
Initial jobless claims came in higher than expected, with the level reported in the week ending January 31 up 22,000 from the unrevised 209,000 level reported for the prior week. The January 31 week's level compares to the consensus of 212,000 in the Econoday survey of forecasters. The four-week moving average rose by 6,000 to 212,250 in the January 31 week.
Seasonal factors had expected a drop in unadjusted claims of 3,766 (-1.6 percent) from the previous week, but instead there was a large increase of 20,018 (+8.6 percent).
Illinois (+2,204), Missouri (+2,631), New Jersey (+2,214), New York (+3,421), and Pennsylvania (+5,301) reported noticeable increases in unadjusted first-time claims, while only Nebraska (-2,166) reported a significant decline.
Insured unemployment was at 1.844 million in the January 24 week, with the prior week's level revised down to 1.819 million from 1.827 million. Continuing claims are lower by 30,000 vs. the same week a year ago. The four-week moving average is down 14,750 to 1.851 million, from a downwardly revised 1.866 million in the January 17 week. The insured rate of unemployment remained at 1.2 percent in the January 24 week.
Market Consensus Before Announcement
After reaching 209K in the latest week, the consensus looks for claims up again at 212 K this week.
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.
