NEW YORK (Reuters) - New U.S. claims for unemployment benefits fell more than expected last week, dropping below the key 400,000 level for the first time since early April, according to a government report on Thursday that pointed to some labor market improvement.
ANTHONY CHAN, CHIEF ECONOMIST, JPMORGAN PRIVATE WEALTH MANAGEMENT, NEW YORK
“When you look at last week and this week, it does suggest we are making a gradual progress toward healing many of the labor market problems that we have.
“I would view this number as encouraging — not as encouraging as the headline would suggest, but certainly encouraging.
“If the four-week moving average moves below 400,000, that would confirm we’re making definitive progress. Right now the best conclusion is this suggests the progress is tentative.
“I would not jump on the bandwagon suggesting labor market problems are completely healed because there are severe seasonal adjustment problems.”
ROBBERT VAN BATENBURG, HEAD OF GLOBAL RESEARCH, LOUIS CAPITAL MARKETS, NEW YORK
“It was a nice surprise but prior week’s revision is up. But I don’t think it’s a lasting thing. If the Washington continues to play hardball on this debt issue, we are going to see shut down parts of the government like back in 1995. That will cause a spike in claims. Believe me, we are not seeing a miraculous comeback in the job market. It’s still pretty grim.”
“What we can say is, it’s slow steps in the right direction. It suggests a modest improvement in the labor market in July. It’s likely that the market will maintain modest expectations for payrolls next week. I don’t think we will see a terribly large bounce because jobless claims do remain elevated although slightly below the June level.”
TODD SCHOENBERGER, MANAGING DIRECTOR AT LANDCOLT TRADING IN WILMINGTON, DELAWARE
“If history is any gauge, the break below 400,000 will be short-lived. Next week’s revision will likely push us above this level, thus maintaining the current unenviable streak of consecutive weeks above 400,000. Traders realize, though, the timebomb for the markets is actually next Friday when the July nonfarm payrolls report is released. Buyer beware—proceed with caution.”
“It’s an encouraging move in the right direction. It’s still pretty elevated, but it’s nice to see it below 400,000. We can’t say anything definitive, but it makes us marginally less concerned that we are slipping into a recession.
PATRICK O’KEEFE, DIRECTOR OF ECONOMIC RESEARCH AT J.H. COHN IN NEW YORK
“Let’s not get hung up on the 400,000 level, that’s an artificial threshold that gets bandied about but doesn’t have a lot of statistical significance. What we see is a long anticipated drop. We’ve been surprised on the upside the past several weeks, but this drop does signal that in the most recent couple of weeks, employers are not laying off large numbers of individuals. What we’re seeing is that the claims levels are returning to their more normal level, which is in a positive direction.”
“It’s a big surprise, it dropped below 400,000 for the first time in a while.”
“It does start to show that there is maybe some downside progress here in the trend, and it could be pretty encouraging for out recovery prospects, but we’re not convinced by this one number just yet.”
TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
“I don’t even know if anyone really cares about jobless claims today. Everyone is so focused on the deficit debate. Any of the positive this may impart into the market is going to be overshadowed by what’s happening in D.C. today.
“It’s good to see the improvement but it won’t have any implications for us for our payrolls forecast.”
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
“It appears that the downward adjustment from an industry trend, holiday rebound, and unforeseen political event that had spiked benefit seeking activity in the first half of the month (such as auto retooling, the July 4th holiday, and the Minnesota government shutdown, which has stopped reporting layoffs specifically related to the temp closure) was greater than expected (seasonals 83k drop vs actual drop of 103k). The seasonally adjusted decline of 24k comes after nearly three months of discouraging levels that had a slight tendency to post weekly gains more so than declines. As a high frequency indicator, it is important to remember the volatility that show in weekly readings (up 47k one week then down 40k the next) and additional reports could validate today’s number, or reduce it to noise.”