Initial Claims Come in Better than Expected

Initial Claims finished came in this morning at 565K versus the previous week's reading of 614K and a consensus forecast of 610K. I believe the improvement may have been exaggerated by inaccurate seasonal adjustment factors stemming from the timing of automotive and other manufacturing lay-offs, which could be repeated next week. Although, I do believe we will continue to see a downward trend in the number of new claims, the level this week's number (and possibly next week's) indicates is too optimistic.

Conversely, continuing jobless claims rose 159,000 to a high of 6.883mn. This increase is primarily due to the lag effect of recently high initial claims coupled with the fact that the unemployed workforce has been unable to find new jobs.