U.S. Jobless Claims Edge Upward

Last week initial claims for unemployment insurance in the U.S. increased to a seasonally adjusted figure of 319,000, a rise of 7,000 from the previous week's revised 312,000, the U.S. Labor Department reported on July 7. The department's four-week moving average for initial claims continued to fall last week, decreasing by 3,500 claims to 320,000. Economists tend to regard the moving average a better reflection of underlying labor market conditions since it smooths out often volatile week-to-week changes.

Merrill Lynch & Co., New York, believes that some "unusual' seasonal forces are likely to be at work on the initial claims numbers during July. "Seasonal distortions due to the early timing of production shutdowns in the auto sector may keep claims relatively low through the month. Elevated inventory levels early on in the year prompted auto manufacturers to shut down production at the end of May instead of the traditional July," said Merrill prior to the release of the most recent data. In August, added Merrill, "we expect claims to return to the more normal 330,000-340,000 range that has held the past year, which has been consistent with relatively subdued job growth."

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