Jobless claims lower than expected falling by 31K

Initial jobless claims were lower than expected, falling 31,000 to 473,000 in the week ending August 21st. The four-week average of claims increased 3,250 to 486,750.

BOTTOM LINE

This is always welcome, but not significant enough to celebrate or even have a crooked smile.  Unemployment figures are always subject to revision and if they are revised downward which often happens, we could remain flat.

We have highlighted the possibility that initial claims have been boosted by the extension of benefits in late July as this was a factor that lifted claims early in the prior recovery. A special factor such as this would help explain the conflicting picture between jobless claims and layoff announcements (which have fallen sharply) and weekly staffing trends (which point to a topping out, but not a decline, in employment growth). That being said, in 2002 the Labor Department cited benefits extension as a factor boosting claims but at this time officials have stated that there are no special factors affecting claims. Thus, we are viewing the claims data as a legitimate reading on labor market trends and we expect that private payroll growth slowed to 25,000 in August from an average of 90,000 per month in the first seven months of this year. The Census Bureau reported this week that there were 83,955 temporary Census workers on payroll in the August employment survey week compared to 200,346 in the July employment survey week. We look for Census workers in the August employment survey to be reported down 115,000. We expect that non-Census government employment fell by an additional 10,000 on budget-related cutbacks in state and local government payrolls and we look for a 100,000 decline in total nonfarm payrolls in August.

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