| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 225K | 218K to 229K | 226K | 229K | 230K |
| Initial Claims - Change | -4K | 4K | 5K | ||
| 4-Week Moving Average | 223.25K | 219K | 219.25K |
Highlights
Initial jobless claims declined slightly more than expected, breaking a streak of three consecutive increases. Employment conditions remain entrenched at a slow hiring pace coupled with a low level of layoffs. It remains to be seen if the reversal in the downward trajectory of longer-term claims rising for the second straight week and back above 1.8 million for the first time in seven weeks continues.
Initial jobless claims came in more than expected, with the level reported in the week ending June 13 down 4,000 from the revised 230,000 level reported for the prior week (previously 229,000). The June 13 week's level compares to the consensus of 225,000 in the Econoday survey of forecasters. The four-week moving average is up by 4,000 to 223,250 in the June 13 week.
Seasonal factors had expected a decline in unadjusted claims of 5,753 (-2.5 percent) from the previous week, but instead there was a larger drop of 9,446 (-4.1 percent).
Only Pennsylvania (+3,734) reported a noticeable rise in unadjusted first-time claims, while Illinois (-2,116) and Ohio (-2,210) reported significant declines.
Insured unemployment was at 1.81 million in the June 6 week, with the prior week's level revised to 1.786 million from 1.795 million. Continuing claims are lower by 125,000 vs. the same week a year ago. The four-week moving average is up 9,750 to 1.788 million, from a revised 1.778 million in the May 30 week. The insured rate of unemployment remained at 1.2 percent in the June 6 week.
Market Consensus Before Announcement
Forecasters expect claims to recede to 225K after rising by 4K to 229K 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.
