Jobless Claims Remain Volatile Because of Auto Sector
Initial Jobless Claims for the week ending July 14 rose 34k to 386k after decreasing by 24k and 12k in the last 2 weeks. According to Deutsche Bank’s Global Markets Research by Joseph LaVorgna, these distortions are because of changing production in the auto sector.
It is not unusual to witness extreme moves around the July 4 th holiday, because the timing of retooling‐related shutdowns in the auto sector are notoriously difficult to account for—and this appears to be the case over the past few weeks.
The report suggests that there have been no fundamental changes in the labor market and this volatility is just because of unpredictable production changes. Hence, they expect no significant improvement in the unemployment rate.
The unemployment rate is likely to remain unchanged at 8.2% in the month.
Moving forward, Deutsche expects the Fed will hold off any effective easing measures till September at least.
Importantly, the FOMC will not have possession of the July employment report at their next meeting (July 31‐August 1); however, at the September 11‐12 meeting they will have seen two more reports.
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