A weekly report issued by the US Department of Labor, Initial Jobless Claims tracks the number of people claiming unemployment benefits in the previous week for the first time. While the report is generally considered a good indicator of the health of the US economy, the numbers tend to be extremely volatile, so four-week averages are the number more closely followed by analysts and investors alike.
The report is released every Thursday at 08:30 Eastern Time (12:30 GMT) and provides a good indication of the strength of the labor market in the US and by extension, a measure of the strength and relative direction of the US economy.
A healthy economy creates jobs. Recession creates unemployment, and first-time unemployment claims provide a valuable insight into the macroeconomics. While there are seasonal and weather events to take into consideration (the hurricane season for example and resulting closures), Initial Jobless Claims tie in with the Continued Claims report.
While Continued Claims are statistically a more accurate reflection of the real conditions of the labor market, Initial Claims are released earlier and tend to have a more significant impact.
The importance of the Initial Claims report comes in the comparison to the last published figure. The previous number came in at 243K against a projection of 251K. Two weeks ago, Initial Claims came in at an adjusted 257,500K, so the recent trend has been for a gradual reduction in the number of first-time unemployment benefit claimants.
The labor market in the US has been on a roll over the last few months with robust data pointing to growth across the board. While the internet and e-commerce have bitten into the retail areas, the same phenomena have helped the growth in related service industries.
While the recent weather events in the US (Harvey and Irma to only name two) took a severe toll on the labor markets in August and September along with school leavers filing first claims, the data for the labor market in the US has been healthy. The last few reports have beaten consensus expectation with investors quietly confident for a low tomorrow (240,000) compared to the previous figure of 257,500.
If the number does come in below last week’s, the 4-week average would be in-line with the bullish view for the US economy
This article is for educational and informative purposes only and should not be considered as investment or trading advice.