US Initial Jobless Claims Signal a Strengthening Labor Market

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In its weekly report, the
U.S. Department of Labor
said, for the week ending June 30, the advance figure for seasonally adjusted initial claims was 374,000. This reading was better than the consensus estimate of 385,000, and decreased 14,000 from the previous week's revised figure of 388,000. Initial jobless claims data measure the number of individuals filing for jobless benefits for the first time during the previous week. A lower-than-expected reading is typically a positive signal about the U.S. job market, as more people remain employed. When emerging unemployment is low and less than expected, it indicates a relatively healthy or a recovering economy. Thursday, the initial jobless claims' four-week moving average was 385,750, decreasing 1,500 from the previous week's revised average of 387,250. Continuing jobless claims measure the number of unemployed individuals who continue to be eligible for unemployment benefits. The
U.S. Department of Labor
said the advance number for seasonally adjusted insured unemployment, during the week ending June 23, was 3,306,000. This number was worse than the consensus estimate of 3,300,000, and increased 4,000 from the preceding week's revised level of 3,302,000. The four-week moving average for continuing jobless claims decreased 3,000 on Thursday. The average moved to 3,304,250 from the preceding week's revised average of 3,307,250. U.S. equity futures were basically unchanged after the 8:30 a.m. ET release. During Thursday's regular trading hours, the Dow Jones Industrial Index traded around 70 points lower.

ACTION ITEMS: Traders who believe that Thursday's jobless claims readings are a leading indicator for the U.S. economy might want to consider the following trades:
  • Short general retail companies like JCPenney JCP because, as more individuals leave the workforce, people likely will spend less of their residual income.
  • Short consumer discretionary companies like Target TGT or the Consumer Discretionary ETF XLY.
  • Long consumer staple companies like Procter & Gamble PG and Colgate CL because, even if fewer people remain in the workforce, consumers still likely need to buy staple products like shampoo and toothpaste.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
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