Weekly US jobless claims surprise to the downside

Weekly jobless data in the States surprised to the downside with both initial and secondary claims retreating, alongside downwards revisions to the figures for the preceding week.

According to the Department of Labor, initial jobless claims for the week ending on 17 October dropped by 55,000 to reach 787,000 (consensus: 885,000).

That was on top of a downward revision of 56,000 to the reading for the prior week to 898,000.

The four-week moving average also dropped, by 21,500 to 811,250.

Secondary claims, those which are not being filed for the first time and referencing the week that concluded on 10 October, fell by 1,024m to hit 8,373m.

Here too, claims for the preceding week were revised lower, by a hefty 621,000 to 9.397m.

Ian Shepherdson at Pantheon Macroeconomics pointed out that the significant downwards revisions to claims data for the prior two weeks was the result of new data from the state of California, which had implemented changes to its reporting systems.

Nevertheless, while the recent trend was now "better", he believed it would be short-lived, not least because of the rising number of Covid-19 infections of the past few weeks and with the hospitality sector expected to fare the worst.

Indeed, the most timely data from the state of Wisconsin, which published claims data on a daily basis, had been closely tracking new Covid-19 infections over the past month or so.

For the continuing claims figures specifically, roughly half the reported drop was the result of people dropping off regular state benefit programmes and moving to Pandemic Emergency Employment Compensation - PEUC - and extended benefits - both of which are excluded from the headline figure, he added.

Furthermore, Shepherdson argued, some of the people no longer claiming benefits may have dropped out of the labour force altogether.