Instant View: Weekly jobless claims dip, 4-week average rises

NEW YORK (BestGrowthStock) – New U.S. claims for unemployment benefits fell more that expected last week, but a measure of underlying labor market trends rose to a nine-month high, government data showed on Thursday.

KEY POINTS: * Initial claims for state unemployment benefits fell 31,000 to a seasonally adjusted 473,000 in the week ended August 21, the Labor Department said. * The four-week average of new claims, considered a better measure of underlying labor market trends as it irons out week-to-week volatility, rose 3,250 to 486,750, the highest since late November. * Analysts polled by Reuters had forecast initial weekly jobless claims slipping to 490,000 from the previously reported 500,000 the prior week, which was revised up to 504,000 in Thursday’s report.

COMMENTS:

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

“The number is weak even if it is better than last week. Yesterday we had weakness in durable goods and home sales, and in that broader picture this seems less encouraging. If those points had also been stronger, I would be happier.

“We could get an early trading bounce on this, but I think there will be a shift later on because of the Fed.”

BRUCE MCCAIN, CHIEF INVESTMENT STRATEGIST, KEY PRIVATE BANK, CLEVELAND, OHIO:

“This is obviously a little better than had been expected, but we’re still in the range where while we’re not seeing a lot of job losses we’re also not seeing the kind of gains we’d like to see. That leaves us stuck in an area where things aren’t getting worse, a huge plus, but they’re not improving as much as we’d like.

“In general, we probably will see a better day in the markets on this news. The market seems to have a more positive tone right now and is benefiting from the lowered expectations investors had.”

THOMAS SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO, NEW YORK:

“It’s an encouraging sign because there has been some skepticism whether these elevated levels were legitimate. No one was bullish on the labor market, but it was not as bearish as some people had thought. This is still a relatively weak number, but it’s the lowest level since late July.

“Our call is still that we are not heading toward a double-dip. People are hot on this double-dip and deflation — we will need a lot more better data to change their call.

“The bond market sold off pretty good in the long-end after the data. People were probably looking for a reason for a correction after the recent run-up.”

DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

“The sharper than expected drop in claims is taking a small toll on the market, with sevens underperforming the wings which makes sense in light of the auction versus buyback. There’s nothing in the claim report to be particularly encouraging so we don’t describe the drop as good economic news, and indeed the gain in emergency/extended back near the cycle highs underscores the ongoing stress in labor. But for now, consistent with chart momentum, the market has some downside to probe.”

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW YORK:

“After last week’s disappointing figure, today’s number is certainly a relief but it doesn’t change the fact that it’s still very elevated at this point of an economic expansion as the labor market still remains very sluggish with businesses still reluctant to hire and take risk.”

DANA SAPORTA, ECONOMIST, CREDIT SUISSE, NEW YORK:

“The weekly figure is lower-than-expected but the four-week moving average is going up. These data show that the labor weakness remains the primary concern in the economy. That’s something that (Fed Chairman Ben) Bernanke has to address at his Jackson Hole speech tomorrow. He has to explain how the credit easing strategy will help the real economy, something that some people have questioned.”

MARKET REACTION: STOCKS: U.S. stock index futures extend gains after fall in jobless claims. (.N: ) BONDS: U.S. Treasury debt prices trim gains. DOLLAR: U.S. dollar erases losses versus yen.

Instant View: Weekly jobless claims dip, 4-week average rises