Initial jobless claims drop more than expected

Initial jobless claims fell by 8,000 to 252,000 last week, according to the Department of Labour.

Economists had forecast, according to Bloomberg, that first-time claims for unemployment insurance rose by 1,000 to 260,000.

As the most timely gauge of the labour market, being tracked on a weekly rather than monthly or quarterly basis, economists track claims for early signs of trouble.

Last week coincided with the survey period for the monthly jobs report, and the drop in claims could bode well for the September number when it’s released next month.

For 81 straight weeks, claims have not totaled more than 300,000 in a single week, the longest streak since 1970.

The drop in claims reduced the four-week moving average, a better gauge of the real underlying trend that smooths out week-to-week noise, by 2,250 to 258,500.

“All the softening in payroll growth this year has been due to a slower pace of hiring, not rising layoffs,” wrote Pantheon Macroeconomics’ Ian Shepherdson in a preview to clients.

“We appreciate that falling hiring tends to be the first signal of cyclical deterioration in the labour market, but note that hiring intentions are more volatile than layoffs. Right now, we see no sign that employers are so worried about the outlook that they need to start letting people go in greater numbers.”

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