First Time Jobless Claims Falls 16K

Layoffs are on the decline, indicated earlier this morning by trends in the Challenger report and confirmed by yet another set of very low readings for jobless claims. Initial claims fell a very steep 16,000 in the July 2 week to 254,000 which is below Econoday's low estimate. The 4-week average at 264,750 is trending about 5,000 lower than a month ago which is a constructive signal for growth in the labor market.

Continuing claims are sending the same signal, down a sizable 44,000 in lagging data for the June 25 week to 2.124 million with the 4-week average up but only slightly to a 2.148 million level that is steady against the month-ago trend. The unemployment rate for insured workers is very low at 1.6 percent.

A lack of layoffs doesn't necessarily equate to a rise in employment -- but it is a strongly favorable signal. The Labor Department is not citing any special factors in today's report though temporary layoffs and related adjustments for auto-retooling is always a background factor this time of year. Also of note is that results from five states as well as Puerto Rico were estimated in the week, a factor that could add volatility to next week's revisions.

Recent History Of This Indicator:
Initial jobless claims did rise 10,000 in the June 25 week to 268,000 but the gain followed a 19,000 decline in the prior week to 258,000. Forecasters see claims holding near the higher level, at a consensus 269,000 for the July 2 week. Levels of initial claims as well as continuing claims are at or near historic lows in a strong indication of health for the labor market.