Last week, the US labor market got a double-dose of good news.
The headline print on the July jobs report came in better than expected (troubling statistics lurking just beneath the surface notwithstanding) and, perhaps more importantly given the premium placed on “high frequency” data in the current environment, jobless claims fell for the first time in three weeks.
Although initial claims remained stubborn above 1 million (i.e., stuck at levels that would have seemed unthinkable prior to the pandemic), last week’s number was the lowest of the COVID era, and snapped a worrisome two-week streak of higher prints. Markets were hoping for more good news Thursday, and they got it — claims dropped below 1 million for the first time since the onset of the crisis.
963,000 Americans filed for unemployment benefits last week, fewer than the 1.1 million economists expected. The four-week moving average fell to 1,252,750.
Continuing claims fell as well, another encouraging sign. The market was expecting 15.8 million. The actual number in the week through August 1 was 15.49 million.
This would be good news on its own, but it’s made all the more reassuring given that Donald Trump’s executive order on the extension of the federal unemployment supplement taps a finite pool of money, and states (which are expected to chip in) are generally in poor financial shape.
The lower claims are, the longer that finite stash of diverted disaster relief funds will last, and the less onerous will be the burden on states.
This ostensibly buys Congress more time to compromise on a virus relief package, although in true “good news is bad news” fashion, it may reduce the urgency of the talks at the margins.
Of course, we cannot let it be lost on us that 963,000 is still far higher than the previous all-time record for initial claims, set in 1982.
In other words, the “best” prints post-COVID would still count as the worst prints in the pre-pandemic world.
Another notable from the report: total claimants fell by more than 3 million in the week ending July 25, to 28,257,995.
There will be those who question how that’s possible. But I suppose the market can just adopt a “We’ll take whatever we can get” approach to the numbers which, again, are what count as “good” in this new, virus-blighted realm we’re calling “reality”.