Initial jobless claims in line with forecasts

Initial jobless claims were about in line with forecasts, falling 6,000 to 472,000 in the week ending August 28th. The four-week average of claims declined 2,500 to 485,500.

BOTTOM LINE

Thank heavens for small mercies. Initial claims look to be slowly drifting back down into the area that they troughed at earlier in the year. We had pointed out that there had been similar backups in claims in the 1991/92 and 2002 recoveries and we had floated the idea that the recent increase in claims might be due to unnecessary re-filings for those who had temporarily lost extended benefits before the legislation authorizing them was renewed (this also happened following the benefits extension in 2002). It would take a sustained move above 500,000 in claims these data to signal that the economy might be slipping back into recession. However, even if claims fall back into the 450,000 area (as we judge likely over the coming weeks), they would still be at a level that historically has not been consistent with solid job creation. Despite the modest improvement in recent weeks, the claims data remain the weakest of labor market indicators.

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