US initial jobless claims unexpectedly fall

Initial jobless claims declined by 12,000 from the previous week’s level to 237,000, versus expectations for an increase to 250,000. The previous week’s level was revised up by 1,000.

The four-week moving average came in at 246,750, down by 6,750 from the previous week’s average, which was revised up by 250.

The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.

Nancy Vanden Houten, lead US economist at Oxford Economics, said "we can't read too much into the one-week change as the seasonally adjusted headline figures can be noisy during the week that includes the July 4th holiday".

She added: "Continued claims rose in the week ended July 1. Seasonal noise aside, the claims data are consistent with a labour market that may becoming less tight but is still characterised by very few layoffs. The FOMC is still on track, in our view, to raise rates at its meeting later this month.

"We expect that jobless claims will rise steadily later in the year as the economy falls into a recession. However, 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 modest compared to prior recessions."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the dip in jobless claims "should be viewed with great scepticism, because the seasonals can’t cope with shifts in the timing and extent of the annual automakers’ retooling shutdowns".

"We can’t take the weekly data serious again until mid-August, by which time the distortions will be over. For the next few weeks, anything can happen; a hefty rebound next week is a decent bet," he said.