| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 212K | 205K to 220K | 189K | 214K | 215K |
| Initial Claims - Change | -26K | 6K | 7K | ||
| 4-Week Moving Average | 207.5K | 210.75K | 211.0K |
Highlights
Claims are down far more than expected, an extraordinary 26K to 189K, well below the 2K decline anticipated in the Econoday consensus. NSA claims are also down 26,668 so this is no seasonal adjustment fluke -- but these weekly figures are notoriously noisy.
The more reliable 4-week moving average is down 3,500 to 207.5K from 211k in the prior week, still a very impressive showing, another sign alongside the ADP weekly figures, that the job market remains resilient.
Market Consensus Before Announcement
The consensus sees claims down to 212K in the week, closer to the 4-week moving average of 210,75K, from 214 last 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.
