| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 219K | 215K to 225K | 215K | 215K | 217K |
| Initial Claims - Change | -2K | -1K | 1K | ||
| 4-Week Moving Average | 218.75K | 222.0K | 222.5K |
Highlights
Initial jobless claims declined for the second straight week, probably the result of July 3 being a public holiday. This means claims could spike in the July 11 week. The reversal in the downward trajectory of longer-term claims continues – remaining above 1.8 million for four consecutive weeks.
Initial jobless claims came in slightly less than expected, with the level reported in the holiday week ending July 4 down 2,000 from the revised 217,000 level reported for the prior week (previously 215,000). The July 4 week’s level compares to the consensus of 219,000 in the Econoday survey of forecasters. The four-week moving average is down by 3,750 to 218,750 in the July 4 week.
Seasonal factors had expected an increase in unadjusted claims of 11,478 (+5.3 percent) from the previous week, but instead there was a smaller rise of 9,967 (+4.1 percent) – likely due to the nationwide holiday on July 3.
California (+8,467), Michigan (+4,401), Missouri (+5,872), New York (+4,855) and Tennessee (+2,310) all reported a noticeable rise in unadjusted first-time claims, while Connecticut (-2,566), and New Jersey (-3,014) reported significant declines.
Insured unemployment was at 1.814 million in the June 27 week, with the prior week’s level revised to 1.806 million from 1.814 million. Continuing claims are lower by 138,000 vs. the same week a year ago. The four-week moving average is up 7,000 to 1.808 million, from a revised 1.801 million in the June 20 week. The insured rate of unemployment remained at 1.2 percent in the June 27 week.
Market Consensus Before Announcement
Claims expected up 4K at 219K in the latest week as they remain stuck around that level, suggesting a stable job market with not many people losing jobs but not many getting new jobs either.
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.
