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Jobless Claims Report and the Investment Markets
The Forex market, like most investment markets, is heavily influenced by some of the key economic news of the day. Not only do investors closely follow these reports or indexes, but also economists and politicians. In fact, overall economic policy can actually be influenced by positive or negative reports. One such report, the Jobless Claims Report, receives a wide level of attention from just about everyone in the nation.
What does the Jobless Claims report measure?The Jobless Claims Report measures the number of new jobless claims for state jobless benefits per reporting period. That reporting period (and release) is one of the shortest around – one week. The actual results are released every Thursday for the preceding week. Even though the report is extremely timely, it can be highly volatile since the number of claims can change greatly from one week to the next. The Jobless Claims Report that is so often publicized in the news is a four-week average, which gives it a little less volatility.
Why is this report so popular?Unlike a lot of other economic indicator reports, the Jobless Claims Report is fairly easy to understand – an increase in the number of state jobless claims basically means that more people are out of work, while a decrease in the number translates into more people being employed. Since the Jobless Claims Report is so easy to grasp, politicians often use its results to garner support for or against current economic policy.
This index is also popular since it’s closely tied into the overall gross domestic product – a greater number of people employed means higher consumption levels, which leads to a higher GDP. On the flip side, less people employed means lower consumption levels, resulting in a lower GDP.
Negative aspects of the reportBesides the highly volatile nature of the index, the Jobless Claims Report does not take into account any seasonal or summer vacation numbers. For example, the number of jobless claims might decrease during the winter holiday season due to the increase in the number of part-time employees and not due to any strengthening in the economy. In addition, no industry breakdown exists, which can negatively affect the public’s opinion on the economy’s overall performance if just one or two industries have reduced employment needs.
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