EmailAfter falling below the upper bound (410,000) of our "Recovery Zone" for the first time since April 15, the initial claims level increased from 408,0000 for the week ending July 9 to 418,000 for the week ending July 16. The Briefing.com consensus expected the initial claims level to increase to 411,000.
The increase in claims this week was actually lessened by favorable seasonal adjustment factors. Like last week, automakers typically go through a cyclical downturn in the beginning of July as plants retool for new model year production. The parts shortages from Japan caused plants to idle earlier than normal. As a result, auto manufacturers laid off less people than normal, causing a big statistical bias to develop and setting up for a better claims level.
If the seasonal adjustment factors were correctly factored in, we estimate that initial claims may have topped 430,000 for the first time since the week ending May 6.
Considering that this week's data are used by the BLS in its employment report, none of the claims data give hope that the July payroll and unemployment numbers will be substantially better than June.
The continuing claims level decreased from 3.748 million for the week ending July 2 to 3.698 million for the week ending July 9, in-line with expectations.
