The monthly jobs report is considered important because it is so closely watched by so many, and it moves the markets. It is often headlined with the unemployment rate (for July, 4.9%) and the number of new jobs created or lost (for July, +255,000). Astute investors pay more attention to the weekly initial-jobless-claims number (which was released Thursday and came in at 269,000). In this corner’s opinion, this number can tell you much more about the health of the economy than the others, and it continues to be a positive story.
Let us start by looking at a historical chart of initial jobless claims.
Click here to see an annotated chart of weekly initial jobless claims.
The chart shows that the employment picture in the U. S. has improved for the longest stretch since 1973. This observation is based on a moving average of new jobless claims staying below 300,000 for 74 weeks in a row. In our adaptive market-timing model at The Arora Report, we use the 300,000 level as a threshold.
The other observation from the chart is that weekly initial jobless claims are now lower than the lows experienced during the boom time before the Great Recession. The lower the number is, the better it is for the economy. A lower number means a smaller number of workers filing for unemployment. Fewer layoffs indicate a strong economy.
Where the advantages lie
Investors’ real concern is what will happen next…Read more at MarketWatch
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