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Initial Jobless Claims Rise More Than Anticipated

August 20th, 2009 Michael McDonough

Initial jobless claims rose this morning by 15K to 576K compared to last week’s number revised number of 561K, and a consensus forecast of 550K.  This is the second consecutive week claims have unexpectedly risen.  The 4wk moving average moved up by 4,250 to 570K.  Despite the rise over the past two weeks, claims should begin to moderate over the months ahead, however, there are now slightly more downside risks to this forecast.  The current level of initial claims current level is uncomfortably high, and will continue to adversely impact the US payroll data for some time.  In fact using a simple regression analysis claims at their current levels would indicate a decline in payrolls of roughly 500K, however, recently this model has been exaggerating the actual effect on payrolls, but nevertheless is a cause for concern going forward.

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