July 5, 2012 / 12:46 PM / 6 years ago

Instant View: Private sector jobs up, jobless claims down

NEW YORK (Reuters) - The number of Americans filing new claims for unemployment benefits last week fell by the most in two months, government data showed on Thursday, a hopeful sign for the struggling labor market.

U.S. private employers added 176,000 jobs in June, topping economists’ expectations, a report by a payrolls processor showed on Thursday.

JOBLESS CLAIMS:

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

“Both the initial claims and the ADP are to the strong side of expectations but the ADP is not a high credibility indicator given the relatively small movement that occurred. But it points to a stronger payrolls number rather than a weaker one.

“Initial claims fell sharply enough to suggest there might not be an underlying upward trend in layoffs. The number of initial claims and layoffs took a big step up in June. Now we’re in the July payroll month and there is no confirmation or extension of that June trend.

“However, there is a technical reason to doubt this claims number because it comes at the very end of the quarter and many people will postpone filing for unemployment insurance until the beginning of a new quarter because it can increase their benefit check. So you might see a bigger increase early in July.”

VASSILI SEREBRIAKOV, CURRENCY STRATEGIST, WELLS FARGO, NEW YORK

“It’s a better-than-expected number and to some extent consistent with the also firm ADP employment report. Jobless claims have been deteriorating for a number of weeks now so this is a welcome sign, although it remains to be seen whether this improvement can be sustained going forward.”

JOHN CANALLY, ECONOMIST/INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON

“It is the last week of the quarter. People might wait for the beginning of the third quarter before they file. It might be some seasonal factors. Expect it to snap back next week.”

“The claims and the ADP report and the Challenger data suggest while companies are cautious with hiring, they are not laying off a slew of workers. They want to at least hang on to their workers which is different from 2008.”

“The Federal Reserve needs to see sustained improvement like the claims moving back down toward 300,000 and steady decline in the unemployment rate. If we get a couple of more bad jobs reports, it will come in with more stimulus. Today’s reports suggest they might hold off, but they will want to see more data before they decide.”

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON D.C.

“Jobless claims are a move in the right direction. The drop, combined with the ADP report earlier, suggests the jobs market is not as weak as recent data has suggested. The ADP does suggest there is a risk for a upside surprise in tomorrow’s payrolls report, which is good for the dollar.”

ADP:

ROBBERT VAN BATENBURG, HEAD OF GLOBAL RESEARCH, LOUIS CAPITAL MARKETS, NEW YORK

“In isolation, this is a healthy surprise that private worker hiring came in higher than expected. I don’t know if it’s sustainable. But this doesn’t help expectations that the Federal Reserve will come soon with more stimulus to help the economy.”

MARKET REACTION:

STOCKS: U.S. stock index futures turned positive but were little changed after the jobless claims data.

BONDS: U.S. Treasury debt prices trimmed their earlier gains and yields hit session highs after the ADP data but they showed little movement after the jobless claims figures.

FOREX: The dollar trimmed its losses versus the yen after the ADP number then hit a two-week high versus Japanese currency after the jobless claims numbers.

Americas Economics and Markets Desk; +1-646 223-6300

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