Initial jobless claims ticked slightly downward for the week ended July 30 to 400,000 as a result of a moderate upward revision to prior week claims. The four-week moving average dipped notably to 407,750, its lowest point since the week ended April 15.
Before seasonal adjustments, the decline for the week was much more noteworthy, as layoffs across a range of industries and regions dropped substantially.
While the direction in claims was favorable, the four-week moving average remained north of 400,000 for the fifteenth consecutive week, hardly indicative of a pleasant labor market environment.
The U.S. economy remains in a questionable phase and employers are well aware of it. The recent softening in the U.S. economy coupled with generally declining expectations for growth in the second half of the year is likely to continue to weigh on hiring plans, making sustained improvement in job creation unlikely in the months ahead.
The perceived risk of a double-dip recession has risen in recent weeks as well. The announcement last week of the downward revision to first quarter growth and the softer than anticipated estimate of second quarter growth raised the stakes considerably.
This sets up another interesting jobs report tomorrow. Last month’s results were poor by any measure. While a strong rebound in the July numbers is unlikely, some improvement in job creation for July or upward revisions to the June numbers could alleviate some of the market’s concerns at least temporarily.
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