Initial US jobless claims drop sharply, but some economists cautious

US jobless claims for the previous week surprised sharply to the downside, although at least one top-ranked economist was expecting the improvement to be short-lived.

According to the Department of Labor, initial unemployment claims for the week ending on 28 November dropped by 75,000 to reach 712,000.

That was considerably better than the print of 760,000 that some economists had penciled-in.

However, Ian Shepherdson at Pantheon Macroeconomics put the drop down to the difficulty in adjusting the numbers to take into account the Thanksgiving Day holidays.

"The plunge in initial claims does not refute the idea that the trend is rising," Shepherdson added.

"Initial claims likely will rebound strongly next week, probably rising above the 800K mark for the first time in eight weeks. Soaring Covid cases and the accompanying tightening of restrictions are hammering the discretionary services sector."

So-called secondary unemployment claims, which reference the next-to-last week, that ending on 21 November, also fell sharply, by 569,000 to 5.520m.

Secondary claims are more closely linked to hirings in the economy, as opposed to firings.

Nonetheless, here too Shepherdson cautioned the figures needed to be carefully interpreted.