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What Recent Trends in Jobs Data Mean for the Auto Industry

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Part 2
What Recent Trends in Jobs Data Mean for the Auto Industry PART 2 OF 3

What the Trend in August Jobless Claims Means for Autos

Jobless claims fell in August

According to the latest data released for the week ending August 26, 2017, the SAAR (seasonally adjusted annual rate) for US initial jobless claims stood at 236,000. The data, released on August 31, reflected a rise from the previous week’s SAAR for jobless claims, which stood at 235,000.

What the Trend in August Jobless Claims Means for Autos

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Each week, the US Department of Labor releases initial jobless claims data. The data track employment conditions and show how many people filed for unemployment benefits in the previous week. It’s considered a measure of strength or weakness in the labor market.

The data on a not seasonally adjusted basis suggests that 196,020 US citizens claimed unemployment insurance during the week ending August 26. In comparison, a lower number of 195,130 individuals claimed the insurance in the previous week.

Four-week average

As you can see in the above chart, the four-week moving average of jobless claims was on a downward trajectory. Currently, it’s at 236,750—not far from a 44-year low. A week is a very short period to analyze jobless claims’ existing trend. Investors often prefer the four-week average for jobless claims to avoid statistical noise.

Jobless claims less than 300,000 are considered to reflect a strong job market. A recent drop in the four-week average of these claims could be a positive indicator for the auto industry.

A strong jobs market boosts auto companies’ growth prospects (XLY) including Ford (F), General Motors (GM), Toyota (TM), and Fiat Chrysler (FCAU).

In the next part, we’ll discuss what to expect from non-farm payroll data for August 2017.

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