Latest Jobless Claims Fall Way below Estimate
Key Indicator Updates for Retail Investors (Part 5 of 11)
Jobless claims report
The jobless claims report provides data on the number of individuals who have filed for state jobless claims for the first time. The report is issued by the Employment and Training Administration (or ETA) of the U.S. Department of Labor on a weekly basis.
Latest initial claims
For the week ending March 28, 2015, seasonally adjusted initial claims were at 268,000, a decrease of 20,000 compared to the prior week’s revised claims of 288,000. The figure was way below the median estimate of 286,000 and marked the second-lowest jobless claims number since April 2000. Previously, in the week ending January 24, 2015, the initial jobless claims were at 267,000, marking the lowest applications for unemployment benefits since April 2000.
The four-week moving average, which is a less volatile measure, decreased by 14,750 to 285,500 compared to the prior week’s revised average. The initial claims for the prior week were revised upward by 6,000 to 288,000, from 282,000.
How does this benefit retailers?
A decline in initial jobless claims reflects an improving job market, which benefits the retail sector (XRT). More jobs imply more purchasing power. It also boosts consumer confidence in the economy, which may result in higher consumer spending.
Companies in the retail sector such as Macy’s (M), TJX Companies (TJX), Kohl’s Corporation (KSS), and J.C. Penney (JCP) may benefit from a strong job market. The consumer discretionary sector, which includes retailers and department stores, makes up ~12.6% of both the SPDR S&P 500 ETF (SPY) and the iShares Core S&P 500 ETF (IVV).
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