The Initial Jobless Claims report measures the number of
individuals filing for jobless benefits for the first time during
the past week. A lower-than-expected reading is essentially
better for the U.S. job market, as more people remain in the
workforce.
Theoretically, less people applying for initial unemployment
benefits, the better it is for the US economy. When emerging
unemployment is low and less than expected, it indicates a
relatively healthy economy, or in this case, a recovering
economy.
In its weekly report, the
U.S. Department of Labor
said in the week ending June 9, the advance figure for seasonally
adjusted initial claims was 386,000 worse than the estimate of
375,000, which was an increase of 6,000 from the previous week's
revised figure of 380,000. The 4-week moving average was 382,000,
an increase of 3,500 from the previous week's revised average of
378,500.
The previous week's figure was revised up to 380,000 from
377,000.
Continuing Jobless Claims measures the number of unemployed
individuals who continue to be eligible for unemployment
benefits.
In its weekly report, the
U.S. Department of Labor
said the advance number for seasonally adjusted insured
unemployment during the week ending June 2 was 3,278,000 worse
than the estimate of 3,270,000, which was a decrease of 33,000
from the preceding week's revised level of 3,311,000. The 4-week
moving average was 3,281,500, a decrease of 2,500 from the
preceding week's revised average of 3,284,000.
The previous week's figure was revised up to 3,311,000 from
3,293,000.
U.S. equity futures spiked lower after the 8:30 a.m. ET
release. Currently, the Dow Jones Industrial Index futures are
trading about 4 points lower.
ACTION ITEMS:
Bullish:
Traders who believe that jobless claims is a leading indicator
for the US economy, you might want to consider the following
trades:
- Long general retail companies like JC Pennny (NYSE:
JCP
) because as more people remain in the workforce, the more
likely people will spend their residual income, as they
continue to have a job.
- Also, long Consumer Discretionary companies like Target
(NYSE:
TGT
) or the Consumer Discretionary ETF (NYSE:
XLY
)
Bearish:
Traders who do not believe that the weekly jobless data is a
leading indicator for the general US economy, you may consider
alternative positions:
- Long Consumer Staple companies like Procter & Gamble
(NYSE:
PG
) and Colgate (NYSE:
CL
) because even if less people remain in the workforce, they
still need to buy staple products like shampoo and
toothpaste.
- Also, short big-ticket appliance makers like Whirlpool
(NYSE:
WHR
) if the claims trend is worse-than-expected.
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.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.