World events cool market reaction to upbeat jobs figures

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Initial jobless claims report released

On Thursday, October 2, the U.S. Department of Labor released its weekly initial jobless claims figures for the week ended September 27. Initial claims measure the number of persons applying for first-time unemployment insurance. An increase or decrease in claims signals deterioration or improvement in labor market fundamentals, respectively.

Part 5

Initial claims fall by 8,000

Initial claims fell by 8,000 week-over-week to a seasonally-adjusted level of 287,000. The report didn’t give any specific reasons for the decline. Yet for the third consecutive week, claims fell below the 300,000 level.

The four-week average declined 4,250 week-over-week to 294,750. This average tends to smooth out weekly fluctuations, highlighting the broader trend. This is why it’s the preferred measure for economists and analysts.

Continuing claims fall to the lowest level in over eight years

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The report also included continuing claims figures for the week ended September 20. These delayed figures include the numbers of both unemployed workers eligible for unemployment benefits and those currently receiving them. Continuing claims came in at 2.398 million, the lowest level since June 17, 2006.

The insured unemployment (or IU) rate came in at 1.8%, the same as the previous week. The IU rate measures the proportion of unemployed workers in the insured labor force who are eligible for unemployment benefits, and who are ready and actively looking for work.

Investor impact

Normally, upbeat labor market data proves bullish for stock markets (SPY) (DIA). Bond (BND) (TLT) yields rise on bullish economic data, causing bond prices to fall. But Thursday’s numbers didn’t get much of a reaction. International events took center stage instead. Pro-democracy demonstrations in Hong Kong and concerns about global growth, notably in the European Union and Japan, pulled down international stocks (EFA).

September’s payrolls report

Non-farm payrolls increased by just 142,000 in August, disappointing markets. It was the lowest monthly addition this year and way below the monthly average of ~226,000 in 2014. Markets were likely waiting for the release of September’s report before reacting to labor market conditions. You’ll read about September’s report in the next article.

 

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