NEW YORK — Initial unemployment claims in the United States fell by a substantial 26,000 to 255,000 in the week ending July 18, thereby building on an unrevised 15,000 decline in the previous week to leave claims at their lowest level since 1973, RBC Economics reported.
The latest reading was well below market expectations for a modest decline to 278,000, said Josh Nye, an RBC economist.
The four-week moving average of initial claims, which attempts to smooth out some of the weekly volatility in the measure, fell to 278,500 from 282,500 in the previous week, which had marked a two-month high. Continuing claims for the week ending July 11 fell by 9,000 to 2,207,000, slightly above the cycle low of 2,204,000 seen in late May.
“The outsized decline in initial claims was a surprise to markets because it appeared as an unexpected increase in the first week of July, which likely reflected seasonal adjustment issues surrounding the Independence Day holiday and auto sector retooling,” said Nye.
“While the latest week’s decline is encouraging, difficulties seasonally adjusting the data during traditional summer auto retooling may still be having an effect on the data,” he explained. “The more stable four-week moving average remains close to the recent trend and is slightly above the 277,000 average seen during the June payroll employment survey week.
“The latest week’s moving average, which coincides with the July payroll survey, thus indicates little change in labor market momentum relative to June, when 223,000 non-farm jobs were added,” he added. “Thus, we expect employment growth will remain strong at 210,000 in July, which would roughly match average gains of 208,000 seen in the first half of 2015.”
SOURCE: RBC Economics press release