| One of the most important benchmarks of | | | | make it difficult for companies to find qualified |
| economic health is the employment of a countries | | | | employees. This means businesses might have to |
| work force. This economic data in the U.S. can be | | | | pay overtime wages to their current staff and/or |
| found in the jobless claims report. All economic | | | | offer higher salaries to entice workers away from |
| indicators are watched closely by economists and | | | | other companies. This creates an overall increase |
| the jobless report is no different. The workforce | | | | in wage costs, a driving factor in inflation. |
| is one of the three main components of every | | | | Of course the Federal Reserve keeps a very |
| economy which makes jobless claims one of the | | | | close eye on wage inflation so they can make a |
| most scrutinized and newsworthy report of any | | | | move on interest rates if unemployment dips too |
| of the economic indicators. The jobless claims | | | | far. If the Federal Reserve does raise interest |
| report provides detailed data of Americans filing | | | | rates this can weaken investing markets and may |
| for unemployment benefits for the first time. | | | | cause stocks and bonds to fall. A relatively |
| Also known as The Employment Situational | | | | healthy unemployment number signifies not only a |
| Summary the jobless claims report is released by | | | | strong economy but also a strong business |
| the U.S. Department of Labor: Employment and | | | | climate in which companies are hiring qualified |
| Training Administration. The number is delivered | | | | employees as needed and business managers |
| every week on Thursday morning before the | | | | have confidence in their future business outlook. |
| stock market opens. Each report covers data | | | | All else being equal, this should cause both the |
| from the previous week up until the last | | | | stock market and bond market to rise. |
| Saturday. It also provides revisions from the prior | | | | The frequency of this report has both positive |
| report. | | | | and negative aspects to it from an investors point |
| This report is popular with investors because of | | | | of view. Since it is delivered every week it |
| its straightforward nature. It simply tracks initial | | | | provides a near real time window into the |
| filings by individuals for unemployment benefits. | | | | employment component of the U.S. economy. |
| The report is seasonally adjusted to account for | | | | This is a double edge sword as most traders will |
| holidays, harvests and similar occasions where the | | | | use a four week moving average to smooth the |
| time of year may skew actual employment | | | | volatility of such a frequent report. Most traders |
| status. The current release provides numbers on | | | | view sustained changes of 30,000 claims or more |
| the states which have the biggest changes, while | | | | during the calculation of the moving average as |
| the revised version from the previous week will | | | | statistically indicative of real job growth or loss. |
| show a state by state breakdown. | | | | In addition to the week to week volatility the |
| Another factor that makes the report easy to | | | | jobless claims report may get a lot of attention |
| understand and adds to its popularity, is the | | | | or traders may ignore it completely. It is |
| straightforward view that a low unemployment | | | | contingent on what is happening in the markets |
| number means a strong economy. For the most | | | | that week and the overall uncertainty regarding |
| part that line of thinking has proven to be a | | | | the overall economy. If people are frantically |
| relatively accurate one, however there can be | | | | looking for direction in the economy, then the |
| problems when the unemployment rate falls to a | | | | unemployment report will be closely watched and |
| very low number. This low jobless rate also | | | | its issuance may be heavily traded. |
| means there are fewer job seekers and it may | | | | |