EmailThe initial claims level ticked down for the first time in three weeks, falling from 432,000 for the week ending June 25 to 418,000 for the week ending July 2. The Briefing.com consensus expected the initial claims level to fall to 425,000.
While a decline in the initial claims level is encouraging, the simple fact is that the initial claims level has remained above the upper bound (410,000) of our "Recovery Zone" for 12 of the last 13 weeks and above 400,000 during that entire time. Until claims fall below 410,000, payroll gains may not exceed the 100,000 needed to support normal labor force growth and a stable unemployment rate.
It is possible, however, that the initial claims level is masking strong payroll gains. If the newly jobless are coming predominately from one sector, such as construction or manufacturing, the rest of the economy could be adding jobs at a strong clip that cannot be seen in the jobless benefits data.
The continuing claims level declined from 3.724 million for the week ending June 18 to 3.681 million for the week ending June 25. The consensus expected the continuing claims level to decline to 3.700 million.
