Jobless Claims Post Larger Drop Than Expected

The U.S. Department of Labor has released another installment of weekly jobless claims, and the report showed a much larger drop than expected. Claims in the past week were down to 269,000 from 285,000 the prior week. Bloomberg had a consensus estimate of 281,000 and Dow Jones (via the Wall Street Journal) had its consensus estimate at 280,000.

Another measurement showed a drop as well, with the four-week average falling to 281,250 from the prior week’s 284,750 claims.

Continuing claims fell by 21,000 to 2.249 million as well. This comes with a one-week lag, but it is what we refer to as the army of the unemployed. The unemployment rate for insured workers was down at 1.6%.

One possible problem here: Employment is very often a lagging indicator, and most of the other economic reports are signaling slight contraction or more moderate growth than expected. Still, employment numbers by and large are holding up, even in non-government reports and in regional government employment reports.
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The Bureau of Labor Statistics said in its release that no special factors had an impact on this week’s initial claims. That being said, the past two weeks should be the reporting times that would start to smooth out all of those seasonal trends from holiday hiring by retail and other service establishments.

Thursday’s stock market indications were deeply in the red due to European bank weakness. S&P futures were down almost 30 points at 1,817 and Dow futures were indicated down 246 at 15,620. Those sound bad, but they are far better than they looked around 6:30 a.m. Eastern Time.