15) Economic Indicators: Jobless Claims Report

by · October 16, 2010

What It Is

While majority of the reports are released every month, the Jobless Claims report can be obtained weekly. It is normally available Thursdays before the stock market opens. The data found in the report are gathered from the previous week, with the cutoff date set on the Saturday before the release. Released by the U.S. Department of Labor, it informs the user the total number of initial jobless claims in the country. The report is seasonally adjusted, as known that jobless claims fall down during the holidays and harvesting period.

Basic Information

Because of the very short time period between every release, the data is considered to be volatile. To counter its possible effects, the headline figure usually represents a moving average that’s good for four weeks. This means that the report for this week is the average of the other four previously released reports.

Several different types of information can be find in the jobless claims report. First, you have a list of the states that have the significant changes in jobless claims for the past week. The number of claims can be significantly high or low. The report will also inform you the total number of people who are unemployed as well as the unemployment rate that is considered insured. Nevertheless, these two are minor and would have no major effect on the report. They normally remain the same.

The report also provides information on the number of people who unexpectedly leave work that can have some effect on the run rate of the economy.

A revised report is released a week after, where one can see a more detailed breakdown of jobless claims per state and territory.

The jobless claims reports are also used by market investors. Normally they are analyzed in conjunction with other indicators. It’s common for them to obtain the initial report during the middle of the month and sell or buy stocks in the market depending on the figures. Sometimes they can react strongly to the figures, especially if there is a stark difference between the jobless claims results and other indicators.

How the Report Is Valuable

The week-by-week reporting allows for timelier or more relevant information. The report is also very easy to understand. It’s assumed that if the jobless claims are low, the job market is doing fine. If the job market is okay, the disposable income goes high as more people are given work. It can also increase the GDP or gross domestic product as people have more money to spend.

The report can also get very specific, detailing figures for every state and territory, as well as the adjustments that have to be made between the gross and the net. The agency behind it can also provide commentaries on certain industries where major changes have been happening, for example, “There are more layoffs in the manufacturing industry.” You can find this in state figures.

Things to Watch Out For

Seasonal adjustments make the jobless claims reports volatile and can sometimes wreak havoc on it. To combat the volatility, a lot of market experts have developed a benchmark, which is 30,000 claims or beyond. If this number hardly ever changes or is sustained, then it means the economy is on the upswing. Anything lower than that is considered insignificant.

Using the jobless state claims report alone doesn’t provide you a comprehensive picture of the state of the economy. Though it is detailed, it lacks certain information, such as the breakdown of industry. Moreover, because it’s considered routine and, generally, there are very little change to expect every week, a number of people tend to overlook it.

Tags: