Job creation has been mostly stagnant in the private sector, while jobless claims continue to hold in the narrow range they have been in since the beginning of the year.
Weekly initial jobless claims jumped 19,000 to 479,000 in the latest week, and the 4-week moving average grew by 5,250 to 458,500.
Jobless claims are not only a good barometer of what’s going on in the labor market but also do an excellent job of telegraphing what’s happening in the economy.
If companies in the aggregate see rising sales and detect increased demand, they are much more likely to hold onto workers and we would be seeing a downward trend in claims. Conversely, pessimism should lead to rising claims.
The high level of weekly claims suggests that growth has been slow but the economy is not on the cusp of entering another recession.
Eyes on the labor report
Attention is now turning to tomorrow’s labor report. A decline of 70,000 is expected, per Bloomberg, as temporary census jobs comes to an end. The economy is expected to generate 100,000 private sector positions, while the unemployment rate may tick up to 9.6% from 9.5%.
ADP’s number, which came out on Wednesday, was a bit gloomier. Just 42,000 new jobs added in July following 13,000 in June.
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