Don't Read Too Much Into Job Claims Drop

By John S. McClenahen Although U.S. Labor Department data released July 24 show initial claims for unemployment benefits falling to an unexpectedly low 386,000 the previous week, it's not necessarily the beginning of a better U.S. jobs market. The drop, from a revised figure of 415,000 claims for the week ending July 12, may be a result of seasonal employment adjustments. Evidence that the U.S. economy is again generating a substantial number of jobs will require, among other factors, that initial claims run well below 400,000 for several weeks. Nevertheless, the decline in initial claims last week was the second consecutive weekly decrease. And the Labor Department's four-week moving average for jobless claims, said to be a better reflection of labor market conditions because it smoothes out week-to-week changes, also fell last week. At 419,250, it was 5,500 below the previous week's revised average of 424,750.

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