| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 212K | 205K to 225K | 225K | 215K | 212K |
| Initial Claims - Change | 13K | 5K | 2K | ||
| 4-Week Moving Average | 214.75K | 209K | 208.25K |
Highlights
Initial jobless claims rose for the second straight week and came in higher than expected although not climbing enough to cause alarm. Employment conditions remain entrenched at a slow hiring pace coupled with a low level of layoffs. The downward trajectory in longer-term claims below 1.8 million for the sixth consecutive week continues.
Initial jobless claims came in more than expected, with the level reported in the holiday week ending May 30 up 13,000 from the revised 212,000 level reported for the prior week (previously 215,000). The May 30 week's level compares to the consensus of 212,000 in the Econoday survey of forecasters. The four-week moving average is up by 6,500 to 214,750 in the May 30 week.
Seasonal factors had expected a decline in unadjusted claims of 10,803 (-5.7 percent) from the previous week, but instead there was a mere dip of 121 (-0.1 percent).
Only California (+3,930) reported a noticeable rise in unadjusted first-time claims, while only Texas (-2,157) reported significant declines.
Insured unemployment was at 1.777 million in the May 23 week, with the prior week's level revised to 1.785 million from 1.786 million. Continuing claims are lower by 119,000 vs. the same week a year ago. The four-week moving average is up 4,750 to 1.777 million, from a unrevised 1.773 million in the May 16 week. The insured rate of unemployment remained at 1.2 percent in the May 23 week.
Market Consensus Before Announcement
Claims expected down to 212K from 215K last week, moving back toward the 4-week moving average of 209K after rising 5K last week from 210K.
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.
