Initial Claims Show Modest Decline

Initial claims this week fell by 4K this week declining to 570, this was above the Bloomberg consensus forecast of 562K.  But, the 4wk moving average reached its highest level in  7wks at 571.25K.  Last week’s number was revised to 570K from 574K.  Continuing claims rose 92K reaching 6.23mn.  Initial claims should marginally improve over the coming months as weakness in the labor market slowly abates. But, make no mistake about it these levels are still 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 nearly 500K, however, recently this model has been exaggerating the actual effect on payrolls, but nevertheless is a cause for concern going forward.  US equity futures gave back some early gains on the report.

Next on the docket will be the Non-Manufacturing ISM release at 10:00AM.  Also, early chain store sales results seem to indicate a weaker than anticipated back to school season has led to bigger declines than projected for some retailers in August.

STATES WITH A DECREASE OF MORE THAN 1,000

STATES WITH AN INCREASE OF MORE THAN 1,000