What is 'Initial Claims'

Initial Claims is a report that measures the number of jobless claims filed by individuals seeking to receive jobless benefits. The report, published since 1967, also shows how many unemployed individuals qualify for and are receiving benefits under unemployment insurance. The initial claims number is watched closely by financial analysts because it provides insight into the health of the economy. Policy makers use the initial claims figure in conjunction with other employment data to determine the strength of the labor market.

BREAKING DOWN 'Initial Claims'

Higher initial claims correlate with a weakening economy. Initial claims typically rise before the economy enters a recession and decline before the economy starts to recover. To learn more about unemployment and the economy, see: The Cost of Unemployment to the Economy.

The initial claims report gets released at 8:30 a.m. EST each Thursday by the U.S. Department of Labor. The report’s official title is “Unemployment Insurance Weekly Claims Report.” Initial claims data is collected from local unemployment offices. The information is then given to state unemployment offices and forwarded to the Department of Labor.

The report may show weekly inconsistencies, as every application is filed as a claim, irrespective of the applicant's eligibility to receive unemployment benefits. Shortened work weeks may also skew the data.  The weekly release of the initial claims report makes it useful for indicating trends in unemployment between monthly nonfarm payrolls and unemployment rate data. Generally speaking, week-by-week figures are too volatile to get an accurate assessment of economic changes, so four-week moving averages are also used to smooth out the data.

Initial Claims and Financial Markets Impact

The strength of the economy impacts the appreciation or depreciation of the U.S. dollar (USD) against other major currencies. Therefore, currency traders typically look at the initial claims figure as part of their analyses when assessing a currency's prospects for the immediate future. Usually, a higher-than-expected reading is interpreted as negative/bearish for the USD, while a lower-than-expected reading is considered positive/bullish. For example, if a trader saw an initial claims figure of 225,000, compared to 220,000 in the prior week, he may be more inclined to sell the USD against other currencies.

For bonds, however, a higher-than-expected reading is considered positive/bullish, while a negative reading is deemed to be negative/bearish; this is because bond markets may factor in a higher probability of falling interest rates. For further reading, see the Q&A: Why do interest rates have an inverse relationship with bond prices?

  1. Jobless Claims

    Jobless claims are a statistic reported weekly by the U.S. Department ...
  2. Claims Adjuster

    A claims adjuster investigates insurance claims to determine ...
  3. Structural Unemployment

    Structural unemployment is a longer-lasting form of unemployment ...
  4. Associate In Claims (AIC)

    An Associate in Claims is a professional designation for professionals ...
  5. Third-Party Claims Administrator

    A third-party claims administrator processes claims for a third-party ...
  6. Frequency-Severity Method

    Frequency-severity method is an actuarial method that determines ...
Related Articles
  1. Insights

    Initial Jobless Claims Drop

    The Department of Labor reported an unrevised estimate of 269,000 initial jobless claims for the week of February 6 on Thursday, down 16,000 from the previous week and 33,000 from the prior-year ...
  2. Insights

    The Cost of Unemployment to the Economy

    Unemployment carries many costs, both obvious and hidden, for an economy.
  3. Financial Advisor

    How Labor Force Participation Rate Affects U.S. Unemployment

    While a falling unemployment rate sounds like a good thing, it can actually be indicative of people leaving the labor force because they can't find a job.
  4. Investing

    How inflation and unemployment are related

    How can inflation affect unemployment, and vice versa? Here, we examine the relationship between wage inflation, consumer prices, and unemployment.
  5. Insurance

    Will Filing An Insurance Claim Raise Your Rates?

    An accident can mean higher insurance costs, even if it wasn't your fault. Learn more from whether it is beneficial for you to file an insurance claim for not.
  6. Personal Finance

    2 Reasons Why the Stock Market Leads the Economy

    Pay attention to how economic strength can follow a sustained stock market advance and how economic weakness can result from a stock market slump.
  7. Insights

    3 Economic Challenges France in 2019

    France faces three significant economic challenges in 2019: unemployment, lagging competitiveness and sluggish growth.
  8. Personal Finance

    America’s Labor Market: Hidden Distortions and Uncertain Forecasts

    Employment reports released by the Bureau of Labor Statistics have a profound impact on political, business, consumer, and investor behavior.
  1. What is the difference between structural unemployment and cyclical unemployment?

    Learn more about about the differences between structural and cyclical unemployment and when cyclical unemployment becomes ... Read Answer >>
  2. What is the difference between frictional unemployment and structural unemployment?

    Learn about structural unemployment and frictional unemployment, the differences between the two and their main characteristics. Read Answer >>
  3. What's the difference between cyclical unemployment and seasonal unemployment?

    Learn about the key differences between cyclical and seasonal unemployment. Read about distinguishing features of each of ... Read Answer >>
Trading Center