By Brandon Pilzner
Initial Jobless Claims measures the number of individuals filing for jobless benefits for the first time during the past week.
A lower-than-expected reading is essentially better for the U.S. job market, as more people remain in the workforce. Theoretically, the less people applying for initial unemployment benefits, the better it is for the U.S. economy. When emerging unemployment is low and less than expected, it indicates a relatively healthy economy, or in this case, a recovering economy.
In its weekly report, the U.S. Department of Labor said that in the week ending March 3, the advance figure for seasonally adjusted initial claims was 362,000. This is worse than the estimate of 352,000, which was an increase of 8,000 from the previous week's revised figure of 354,000. The 4-week moving average was 355,000, an increase of 250 from the previous week's revised average of 354,750.
The previous week's figure was revised up to 354,000 from 351,000.
Continuing Jobless Claims measures the number of unemployed individuals who continue to be eligible for unemployment benefits.
In its weekly report, the U.S. Department of Labor said the advance number for seasonally adjusted insured unemployment during the week ending February 25, was 3,416,000 worse than the estimate of 3,400,000, which was an increase of 10,000 from the preceding week's revised level of 3,406,000. The 4-week moving average was 3,417,500, a decrease of 27,500 from the preceding week's revised average of 3,445,000.
The previous week's figure was revised up to 3,406,000 from 3,402,000.
US equity futures saw an initial move lower after the 8:30 a.m. ET release. Around 10:30 Thursday morning, Dow Jones Industrial Index Futures are trading about 43 points higher.
Traders who believe that jobless claims is a leading indicator for the U.S. economy might want to consider the following trades:
- Long general retail companies like JC Penney (NYSE: JCP) because as more people remain in the workforce, the more likely it is that people will spend their residual income.
- Also, long Consumer Discretionary companies like Target (NYSE: TGT) or the Consumer Discretionary ETF (NYSE: XLY)
Traders who do not believe that the weekly jobless data is a leading indicator for the general U.S. economy may consider alternative positions:
- Long Consumer Staple companies like Procter & Gamble (NYSE: PG) and Colgate (NYSE: CL) because even if less people remain in the workforce, they still need to buy staple products like shampoo and toothpaste.
- Also, short big-ticket appliance makers like Whirlpool (NYSE: WHR) if the claims trend is worse-than-expected.
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