Jobless claims dip ahead of benefit expiration

Moody’s economist on inflation concerns, markets, July jobs report preview

Moody’s Analytics chief economist Mark Zandi argues the current inflationary pressure is due to economies reopening, which caused a ‘surge in demand,’ with ‘the supply-side of the economy taking a bit longer’ to ‘kick into gear.’

The number of Americans filing for unemployment benefits fell last week as the expiration of supplemental benefits drew nearer. 

The Labor Department said Thursday that 385,000 Americans filed for initial jobless benefits in the week ending July 31, below the prior week’s downwardly revised 399,000. Analysts surveyed by Refinitiv were expecting 384,000 filings. 

Initial jobless claims "slipped below the benchmark 400,000 level for the first time since the pandemic began around Memorial Day and have essentially hovered there since," said Mark Hamrick, senior economic analyst at Bankrate. 

PRIVATESECTOR HIRING SLOWS SHARPLY IN JULY

Continuing claims, meanwhile, fell to 2.93 million filings, a pandemic-era low, in the week ending July 24, down from the prior week’s upwardly revised 3.296 million. Analysts had anticipated 3.26 million filings. 

A historically elevated 12.9 million Americans are still receiving some form of jobless assistance. 

The $300 per week in supplemental unemployment benefits are set to expire in September. About half of U.S. states ended or announced plans to end the benefits ahead of their expiration. 

Concerns over the health of the jobs market surfaced on Wednesday after the ADP report showed private-sector payrolls slowed sharply in July.  

The private sector added 330,000 jobs last month, down from the 680,000 jobs gained in June. Analysts were expecting the addition of 695,000 jobs. 

Investors will get a deeper look into the health of the labor market when the July jobs report is released on Friday. 

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Analysts are expecting the U.S. economy added 845,000 jobs last month as the unemployment rate fell to 5.7%. The economy gained 850,000 jobs gained in June while the unemployment rate ticked up to 5.9%.  

"With schools opening, vaccinations still on the rise, and the forthcoming expiration of elevated unemployment benefits, the way should be cleared for more employment gains in the coming months," Hamrick said. "That’s barring the truly unforeseen."

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