Weekly US jobless claims stage unexpected drop

The US jobs market registered their largest decline for 20 months, defying once again some economists' forecasts for further easing, , although the Juneteenth holiday may have been a factor.

According to the Department of Labor, in seasonally adjusted terms, the number of initial unemployment claims during the week ending on 24 June dropped by 26,000 to reach 239,000.

Economists polled by Dow Jones Newswires had penciled in a reading of 264,000.

The four-week moving average edged up by 1,500 to 257,5000.

However, Nancy Vanden Houten, leas US economist at Oxford Economics said that seasonal adjustment factors would weigh on the headline claims figure across the next few weeks.

Meanwhile, secondary unemployment claims, which are those not being filed for the first time and referencing the week ending on 17 June slipped by 19,000 to 1.742m.

"We expect that jobless claims will rise later in the year as the economy weakens and falls into a recession," Vanden Houten added.

"Given our forecast for the recession to be mild, along with the difficulties employers have faced hiring workers following the pandemic, we expect job losses in this recession will be relatively small compared to prior recessions."

"Our guess is that the undershoot against the trend in the week ended June 23 will be followed by only a modest overshoot, so we look for a 270K print next week," Ian Shepherdson, chief economist at Pantheon Macroeconomics chipped in.

"The trend is more important under these conditions than the weekly prints, and the trend is rising, consistent with the upshift in both WARN notices of plant closures and mass layoffs, and the Challenger layoff announcement data.

"The increase in claims from last fall’s low already is consistent with a clear slowing in payroll growth; it’s coming."