| Consensus | Consensus Range | Actual | Previous | |
| Initial Claims - Level | 215K | 211K to 227K | 229K | 225K |
| Initial Claims - Change | 4K | 13K | ||
| 4-Week Moving Average | 219K | 214.75K |
Highlights
Initial jobless claims increased 4,000 to 229,000 in the week ended June 6, while forecasters in an Econoday survey had expected a decline to 215,000 from 225,000. This is the third consecutive increase and the highest level since the week ended February 7.
The four-week moving average was up 4,250 to 219,000 during the week.
On an unadjusted basis, claims increased 39,713 (21.1 percent) to 228,276, slightly more than the 35,595 rise (18.9 percent) expected by seasonal factors.
In lagging data, insured unemployment rose 24,000 to 1.795 million in the May 30 week, the highest level since the April 11 week and the largest increase since the February 21 week. The four-week moving average was up 4,750 to 1.781 million. The insured rate of unemployment remained unchanged at 1.2 percent.
Market Consensus Before Announcement
Claims expected to recede to 215K, down toward the 4-week moving average of 214.75K, after a surprisig jump of 13K last week to 225K. Most observers see the employment market as basically in balance and showing stability given headwinds now including surging energy costs.
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.
