Jobless Claims

Released on 7/15/2010 8:30:00 AM For wk7/10, 2010 Prior Consensus Consensus Range Actual New Claims - Level 454 K 445 K 420 K to 460 K 429 K 4-week Moving Average - Level 466 K 455.25 K

Highlights In a report filled with noise, jobless claims plunged 29,000 in the July 10 week to 429,000 (prior week revised 4,000 higher to 458,000). Manufacturing retooling centered in the auto sector, for this year delayed retooling, makes the report very difficult to read. The four-week average is the best handle and it's down 11,750 to 455,250 for the lowest reading since mid May. Whatever improvement there is on the initial side is offset by a big 247,000 jump in continuing claims to 4.681 million in data for the July 3 week. The four-week average for this reading is up 22,000 to 4.581 million for the highest reading since mid June. The unemployment rate for insured workers rose two tenths to 3.7 percent. Summer retooling, which allows laid off workers to file claims, makes adjustments to this series very difficult at this time of year and will cloud its indications for the July employment report.

Market Consensus Before Announcement Initial jobless claims fell 21,000 in the July 3 week to 454,000 for the lowest level since early May. The four-week average fell 1,250 to 466,000, the best weekly improvement since early May though the level is still slightly higher than a month ago. Declines were also seen for continuing claims, down 224,000 in the June 26 week to 4.413 million for the lowest level since November. Markets will be hoping for another dip in initial claims for the latest week but the fact that it is for a holiday shortened week will raise doubts about its reliability.

Definition New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility.  Why Investors Care

Weekly series fluctuate more dramatically than monthly series even when the series are adjusted for seasonal variation. The 4-week moving average gives a better perspective on the underlying trend.