Unemployment Claims
The Unemployment Claims report is one of the news releases from the Federal Reserve (Fed) and is related to indicating the economic health and labor market of the United States. So, what exactly is the Unemployment Claims number? What criteria does it measure? Should traders pay attention to it? Let’s find out.
What is Unemployment Claims ?
Unemployment Claims, if translated literally, means “claims for unemployment.” However, the correct meaning is the request for unemployment benefits, similar to filing for unemployment assistance like we have in our country.
What does Unemployment Claims measure?
Unemployment Claims measures the number of individuals who filed for unemployment benefits for the first time during the past week in the U.S. labor market. The measurement process is as follows:
Filing for Unemployment: When someone loses their job and becomes unemployed, they can file for unemployment benefits through the state’s unemployment insurance program. This process is an initial application where the individual provides information about their work history, income, and the reason for unemployment.
Processing Unemployment Benefits: The state labor department reviews and processes the initial claim to determine eligibility for unemployment benefits. Qualification criteria vary by state, but generally, the individual must be unemployed through no fault of their own and actively seeking new employment without relying on benefits indefinitely.
Unemployment Claims Reporting: The state labor department reports the number of new unemployment benefit claims each week to the U.S. Department of Labor. These figures are then published in the weekly Unemployment Insurance Claims report.
Analysis and Interpretation: Analysts use the unemployment claims data to assess the labor market’s condition. Typically, a rise in unemployment claims indicates increased job losses and economic downturn, while a decrease suggests an improving labor market.
Should traders pay attention to this?
The Unemployment Claims report does not indicate a broad economic trend; it simply shows the number of people filing for unemployment benefits. However, if the number comes in lower than the previous period, it may boost the value of the dollar. Conversely, if the number is higher than before, the opposite effect may occur.
