More mixed news on US Jobs ahead of NFP

US initial jobless claims dropped -249,000 to 1,186,000 in the week ended August 1. That breaks a worrisome rise in claims the prior two weeks with a revised 13,000 uptick to 1,435,000 (was 1,434,000) over the last week of July, and a 114,000 pop to 1,422,000 in the July 18 week. It’s the lowest since March 14, just before the pandemic shut the economy, and the 20th consecutive week initial claims have been over 1,000,000.

The 4-week moving average slid to 1,337,800 from 1,368.750 (was 1,368,500). Continuing claims declined -844,000 to 16,107,000 in the July 25 week versus the revised 800,000 bounce to 16,951,000 (was 17,018,000). The report is better than expected all the way around, though it still reflects hefty weakness in the labor market.

We now have a -2,280,000 continuing claims drop between the June and July BLS survey weeks that is larger than the -1,610,000 decline between the May and June surveys. Initial claims on an NSA basis fell again, by -223,000 to “just” 984,000, after declines of -170,000 and -136,000 that more than reversed the 118,000 rise in the week of July 4th.

The claims downtrend has been more steady through July on an NSA basis, which suggests that the seasonal factors are struggling with the combination of the lack of auto retooling this year, and a likely atypical shortage of tourist activity around the July 4th holiday that was aggravated by the setbacks in retail reopenings. Today’s declines largely negated the worrisome claims signals for payrolls from the past two weeks, as the weekly oscillations probably reflect reporting issues and seasonal adjustment problems with the lack of auto retooling this July.

Earlier, the US Challenger reported announced layoffs surged 92,400 to 262,600 in July. That’s the third highest monthly total on record, and compares to April’s 671,000 and 397,000 in May. Also, cuts are up 576.1% y/y and are at 1,847,700 year-to-date. Most of the job losses continue to come from the leisure and entertainment companies which includes restaurants, bars, hotels, and amusement parks. Last month there were 109,000 layoffs announced. Transportation announced 65,000 in cuts. Hiring announcements increased 171,000 to 246,000, led by warehousing (100,000) and services (33,500).

Tomorrow’s July nonfarm payroll estimates remain largely unchanged. The median forecast of economists polled by Reuters is for the Non-Farm Payroll to rise by 1,600,000, following the big miss in ADP number of 167,000 on Wednesday. The range in the Reuters poll estimates varies from -280,000 to 3,500,000.

The Dollar was narrowly mixed after the smaller than expected increase in weekly jobless claims, and the drop in continuing claims. USDJPY bounced to over 105.55, but is lower now at 105.40, as EURUSD ticked up to 1.1855 but as also retreated to 1.1835. Equity markets turned modestly lower, erasing earlier gains on the futures market, while yields have firmed from near record lows.

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