The prevailing situation in the job market is one of the most important indicators investors in companies such as Honda (HMC) and Fiat Chrysler (FCAU) should track. There are several indicators that gauge the health of the US job market. One is the Initial Jobless Claims report.
The U.S. Department of Labor issues the Initial Jobless Claims report on a weekly basis. The report tracks employment data on how many people have filed for unemployment benefits in the previous week. It’s a measure of strength in the labor market.
Four-week moving average
The above chart shows the four-week moving average jobless claims. Since weekly data could have statistical noise, investors often prefer the four-week average for jobless claims. As you can see, jobless claims are on a downward trajectory and currently at a 15-year low.
Initial jobless claims for the week ending May 9 fell to 264,000. This represents a decline of 1,000 over the previous week. Jobless claims have been less than 300,000 for ten straight weeks. Jobless claims less than 300,000 are generally associated with a strong job market.
There are several other indicators of the US job market that investors should track along with jobless claims. Non-farm payroll data tell investors how many new jobs were created during the month. In the next part, we’ll analyze the latest trend in US (VTI) non-farm payrolls for April.