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[dcengr]

Highlights

* The initial claims level fell to a three-month low as claims declined from 455,000 for the week ending October 16 to 434,000 for the week ending October 23. The Briefing.com consensus expected claims to increase to 458,000.
* Continuing claims fell to their lowest level since November 2008 as claims dropped from 4.478 mln for the week ending October 9 to 4.356 mln for the week ending October 16. The Briefing.com consensus called for claims to fall to 4.428 mln.

Key Factors

* Unfortunately, just like back in early July when claims last broke through the 450,000 barrier, the decline in the initial claims level was not "real" (i.e., a behavioral decision by firms to refrain from firings). Instead, the claims level was adversely affected by poor seasonal adjustment factors that were unable to correctly account for the Columbus Day holiday.
* We expect the initial claims level to return to its 450,000 to 500,000 range next week.
* For the past several weeks, the BLS has made substantial revisions to the preliminary estimate of the continuing claims level. Therefore, the drop to 4.356 may actually be too optimistic and we anticipate an upward revision to around 4.400 mln claims next week.
* The drop in continuing claims was not due to an increase in employment but from the expiration of jobless benefits.
* The emergency claims level continued its sawtooth trend as claims fell from 4.040 mln for the week ending October 2 to 3.782 mln for the week ending October 9. If the trend from the past several weeks holds, then emergency claims should rise again next week.

Big Picture

* New claims have dropped below 500,000, but they are still well above the typical levels found during the last recession. As major companies finish their labor restructuring, many of the newly unemployed are coming from smaller businesses. This tends to cause more hardship on Main Street as many of these workers are unprepared for their job loss.


Category Oct 23 Oct 16 Oct 9 Oct 2 Sep 25
Initial Claims 434K 455K 475K 449K 456K
4-Wk Moving Avg 453K 459K 462K 457K 459K
Continued Benefits 4356K 4478K 4444K 4511K
4-Wk Moving Avg 4447K 4486K 4500K 4523K

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Release Details
Initial Claims

* Importance (A-F): This release merits a C+.
* Source: The Employment and Training Administration of the Department of Labor.
* Release Time: 8:30 ET each Thursday (data for week ended prior Saturday).
* Raw Data Available At: http://www.dol.gov/o...ss/eta/main.htm.

Initial jobless claims measure the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signalling slowing (accelerating) job growth. On a week-to-week basis, claims are quite volatile, and many analysts therefore track a four week moving average to get a better sense of the underlying trend. It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth.

There are two other statistics in this report -- the number of people receiving state benefits and the insured unemployment rate; neither is watched closely by the market. Some analysts track the number of people receiving state benefits from month to month as a guide for job growth, though this series has a poor track record in predicting the monthly employment report. The insured unemployment rate changes little on a weekly basis and is never a factor for the market.

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