Wall Street hails better jobless claims

REPORTS of shorter jobless queues in the United States gave Wall Street some much-needed cheer yesterday after poor housing market and durable goods figures earlier this week heightened fears of a double-dip recession.

Initial jobless claims for state unemployment benefits fell 31,000 to a seasonally-adjusted 473,000 last week, far fewer than the 490,000 that the market had been expecting.

The better-than-expected data boosted shares and helped the US dollar to gain ground against the yen as traders moved out of safe-haven assets and bought back into the dollar.

“No one was bullish on the labour market, but it was not as bearish as some people had thought. Our call is still that we are not heading toward a double-dip,” said Thomas Simons, a New York-based economist at Jefferies.

Although traders welcomed the less bearish jobs data, analysts said the claims are still much too high to indicate a substantial shift in what remains a weak labour market.

Analysts also pointed to the four-week average of new claims, which is considered to be a more reflective measure of the underlying trends in the US jobs market. This rose 3,250 to 486,750, which is the highest number since late November.

The outlook for August’s headline unemployment rate, which will be published next Friday, is still extremely weak.

On average, US economists forecast 110,000 layoffs, mostly Census-related. This would put the jobless rate at 9.7 per cent.

FAST FACTS | A BAD WEEK FOR US DATA

Both new and existing home sales fell at the sharpest monthly pace in July since records began in 1963.
Durable goods orders were weak, supported only by a rise in commercial aircraft orders.