Initial Jobless Claims Plunge To 7-Month Lows (Thanks To Ohio's Fraud Cleanup)

After dropping to YTD lows last week - despite payrolls data showing a weakening labor market - initial jobless claims were expected to rebound modestly in the latest data... but they didn't.

Whatever magic they are using pushed the seasonally-adjusted initial claims data to its lowest since February and the non-seasonally-adjusted claims to their lowest since Oct 2022...

Source: Bloomberg

Once again, we think it is important to remember that two distortions that likely boosted initial claims over the last few months - potentially fraudulent filings in Ohio and expanded eligibility for unemployment insurance in Minnesota - and that has begun to unwind in recent weeks...

Source: Bloomberg

In fact, for the 3rd week in a row, Ohio saw the biggest decline claims as fraud was erased...

Continuing jobless claims also plunged last week - back below 1.7mm - to 1.679mm Americans, equal to the lowest level since January...

Source: Bloomberg

And at the same time, employment cost growth for Q2 were revised higher to +2.2% QoQ SAAR.

As a reminder, the unemployment rate is now at its highest since Feb 2022...

Source: Bloomberg

Do you believe in magic?