| Consensus | Consensus Range | Actual | Previous | Revised | |
| Initial Claims - Level | 220K | 216K to 225K | 208K | 215K | 216K |
| Initial Claims - Change | -8K | -2K | -1K | ||
| 4-Week Moving Average | 214.25K | 218.75K | 219K |
Highlights
The expected uptick in Initial jobless claims following the July 4 holiday week failed to materialize, with first-time filings for unemployment insurance declining for the second straight week. Longer-term claims have now come in above 1.8 million for five consecutive weeks.
Initial jobless claims came in less than expected, with the level reported in the week ending July 11 down 8,000 from the revised 216,000 level reported for the prior week (previously 215,000). The July 11 week’s level compares to the consensus of 220,000 in the Econoday survey of forecasters. The four-week moving average is down by 4,750 to 214,250 in the July 11 week.
Seasonal factors had expected an increase in unadjusted claims of 28,574 (+12.6 percent) from the previous week, but instead there was a smaller rise of 18,834 (+8.3 percent).
Florida (+2,598), Michigan (+3,136), New York (+12,838), South Carolina (+2,003), and Texas (+2,664) all reported a noticeable rise in unadjusted first-time claims, while Missouri (-5,557) and New Jersey (-5,723) reported significant declines.
Insured unemployment was at 1.805 million in the July 4 holiday week, with the prior week’s level revised to 1.821 million from 1.814 million. Continuing claims are lower by 144,000 vs. the same week a year ago. The four-week moving average is up 1,250 to 1.811 million, from a revised 1.810 million in the June 27 week. The insured rate of unemployment remained at 1.2 percent in the July 4 week.
Market Consensus Before Announcement
Claims expected at 220K, up from 215K last week, very close to the latest 4-week moving average at 218.75K.
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.
