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US Labor: Continuing Claims Increase as Expected

Initial Jobless Claims Fall More than Expected

(Continued from Prior Part)

Continuing claims

Continuing claims for the week ended September 26, 2015, increased by 9,000 claims to 2,204,000 from the previous week’s revised number of 2,195,000. Economists had forecasted that continuing claims would reach 2,202,000 from looking at the low job gains in September. The four-week moving average for continuing claims decreased by 14,750 from the previous week’s revised numbers.

What do continuing claims mean to the market?

Continuing claims measure unemployed workers that have been receiving benefits and are covered under unemployment insurance. The continuing claims numbers that are released by the U.S. Department of Labor give the market an idea about new job opportunities. A decrease in this number can signal an improving economy. When the economy gets better, business conditions improve and more people get hired. So this implies an inverse relationship between the economy and continuing claims.

The retail sector of United States and the country’s labor conditions highly correlate, as improving labor conditions and employment spur consumer spending, which drives retail stocks, An increase in continuing claims is a warning sign for retailers like Macy’s (M), Home Depot (HD), and Kohl’s (KSS) and consumer discretionary ETF’s like the Fidelity MSCI Consumer Discretionary ETF (FDIS) and the iShares U.S Consumer Services ETF (IYC).

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