Jobless Claims Hover Near 6-Month Lows, Distortions Dominate

Both the ISM/PMI surveys and ADP showed job losses in the manufacturing sector, while the latter showed solid job gains on the services side. After last week's decline in initial jobless claims, expectations are for more of the same labor market strength this week and sure enough, 227k Americans filed last week, up very modestly from the 221k (downwardly revised last week) hovering around 6-month lows. Non-seasonally-adjusted, initial claims fell to 205k, near 9 month lows...

Source: Bloomberg

Under the hood, Missouri saw a big jump in claims with Ohio, California, and Georgia all seeing notable declines...

However, Goldman highlights 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 - appeared to persist in today’s report.

Those two states accounted for 28k initial claims (vs. 29k in the prior week and 14k in late May; SA by GS). After adjusting for those distortions, initial claims remained near levels last seen in January.

Continuing claims also remained near 7 month lows at 1.700mm...

Source: Bloomberg

However, as Goldman also points out, ongoing seasonal distortions have likely weighed on continuing claims over the last few months, and we estimate they could exert a cumulative drag on the level of continuing claims of 375k between April and September.

So more of the same, all indications suggest a strong labor market entirely dislocated from The Fed's tightening moves.