Initial claims came in at 500K, higher than last week and significantly above the 480K consensus. It appears that the Consensus employees hit the initial claims teller windows more quickly than we thought.
Based on the report, a large percentage of the layoffs were also in construction and manufacturing. Layoffs in Indiana included the auto industry. This is somewhat surprising as just yesterday we saw that motor vehicles and auto parts grew 9%+ compared with the prior month. We hope the auto-related layoffs in Indiana were not from a GM plant, as that great government-aided company just filed for an IPO. The government sure knows how to make money - first take the tax-payer cash to help the 'obese' companies, and then bring them back into the market to make returns off of the free capital provided by the tax-payers.
The story gets even better as extended benefits and EUC (Emergency Unemployment Compensation) went up 49.2K and 260.1K, respectively, during the week of July 31. Not much of a surprise regarding EUC given that the government extended it on July 22 to the end of November, just enough time to get votes of the unemployed! This is another indication that the labor market is not moving at all; and any movement may be in the wrong direction.
Lastly, we note that the 13K decline in continuing claims is misleading. After 26 weeks of receiving initial claims benefits, the recipients are no longer included in the continuing claims figure. Of course, they can come back the next year and file a new claim, which we believe many have been doing.
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