Weekly Initial Jobless Claims Number Explained

Over the past few years the American economy has been in one of the worst recessions in its history and has slowly started to climb back out. There has been one vital part of an economic recovery that continues to be missing in action. What exactly has been missing? Real growth in the employment sector is the factor that continues to put questions on the longevity and strength of this recovery. The latest weekly jobless claims figures even show the crucial number hitting 500,000. This means that there were 500,000 first time filers for unemployment insurance. Investors and the stock market didn't respond well to this number, and that should not be surprising for those who follow the market and jobless claims closely. Let's take a closer look at initial jobless claims and what they mean to you as an investor.

Why Do Weekly Jobless Claims Matter So Much?

Weekly Jobless Claims are released every single Thursday and give us a close look inside the current employment picture for the economy. This information is released by the U.S. Department of Labor at 8:30 am eastern time and often moves markets. Though many people only look at the non-farm payrolls number that is released at the beginning of each month, the weekly jobless claim numbers really are great tool to use when investing. These initial jobless claims are generally a future indicator of which way the non-farm payrolls report can go. What does this mean? If you pay enough attention to the initial jobless claims report you can usually get ahead of many market participants.

Pay Close Attention to the Four Week Moving Average

One thing you need to make sure you do when following the weekly jobless claims data is to keep your eye on the four week moving average. This average is generally a more accurate representation of the state of the employment market, since one week blips are quite common. In one week data a one-time event or a holiday can skew the number. One week does not make a trend in this data, so keep that in mind!

Jobs Are Crucial to Economy and Market

There are several analysts and investment personalities who continue to go on about the "jobless recovery" that America is now in the middle of. A real recovery will always have employment growth, because consumers simply won't be spending if they aren't confident about their job status. If there is a period of negative growth in job numbers or no growth in job numbers, it will definitely end up hurting the stock market in the long run.