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Initial Jobless Claims Report: An Overview on Reading it

Report Date: Every Thursday
Report Time: 8:30am ET
(Find the weekly reports)

This is the format in which the Wall Street Journal and other media sources publish their Jobless Claims Data:

As is usually the case with these economic indicators, usually only the headline numbers are displayed prominently, while several other numbers and facts remain in the body of the Department of Labor’s report.

Headline Numbers
These headline numbers originate from a “News Release” from the Depart of Labor almost every Thursday at 8:30 AM ET. This particular report above contains data that is delayed five days, for the week ended May 2, 2015. The first figure in this report is the seasonally-adjusted number of claims for initial unemployment benefits, which was 265,000, an increase in 3,000 from the previous week’s level of 262,000. As is the case with the monthly employment situation numbers, the previous reading for new claims is sometimes revised—but not in this case. The “prior” and “consensus” numbers are included in part to help investors, traders, and analysts put these numbers in some kind of context.

The next focus of attention is the 4-week moving average of the previous four  weeks of these initial jobless numbers. These weekly numbers are extremely volatile, in part because one large set of layoffs or, say, a shutdown of West Coast ports, can cause a disproportionate change in this data. The 4-week moving average renders a less noisy picture of the current employment climate.           

An important fact in the News Release that was not in many headline notices was that fact that this report’s 4-week moving average number, 279,500, is the lowest such number since May 6, 2000, when the number was 250 claims lower. An important 15 year low!  

Remainder of the Report
Further down in the report, we see a line graph depicting two years of claims that were not seasonally adjusted. Although the D.O.L. news release does not give us exact numbers here, it is apparent from the chart that there were approximately 235,000 actual initial claims in the week ending May 2, 2015, not seasonally adjusted, a very low number by recent historical standards.

The media and analysts seem to prefer the seasonally-adjusted data because these data emphasize employment trends in a way in which they are divorced from seasonal trends. For instance, labor analysts know that there is almost always an uptick in shorter term hiring in the summer and around the winter holidays. Seasonally adjusted data tends to focus the attention on data that is more associated with the strength or weakness of the larger economy.

The importance of this report is in part a reflection of the importance of the state of the job market to all of the other markets. The job market is so important that many market participants need to be appraised of the vicissitudes of this market more often than once per month. It’s also important that the Jobless Claims numbers come with only a five day lag. Since these numbers can be a little noisy, most analysts seem to feel that changes in the 4-week average need to be at least 25,000 to be significant.

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