Jobless claims: Party like it's 1969

For data geeks, the Labor Department's weekly jobless claims report was the only game in town.

But it was not without its surprises.

Last week, 87,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, an unexpected 10.5% drop from the previous week and 25,000 fewer than analysts expected.

That's the lowest number of initial claims since 1969, the year of the moon landing. Nixon was president.

Ironing out weekly volatility, the four-week moving average now shows a clear downward bias.

But while low initial claims are often associated with a strong jobs market, other data continue to suggest the U.S. economy remains in low-hire/low-fire mode.

"The especially big drop in initial claims last week is hard to chalk up to any one factor with confidence," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "That subdued trend mostly reflects the modest layoff rate in the economy at large."

Still, with claims at multi-decade lows and an unemployment rate at 4.2%, the U.S. Federal Reserve has every reason in the world to focus its attention on the other half of its dual mandate: inflation.

Ongoing jobless claims USJOBN=ECI, which are reported on a one-week lag, were essentially unchanged at 1.716 million, or 11,000 south of consensus.

The June employment report not only showed job adds fell 48% short of expectations but it also showed the labor market participation rate falling to 61.5% of the workforce—its lowest level since March 2021 as the economy was clawing its way out of the COVID abyss. You'd have to go back to 1976 to find a lower rate.

The most recent JOLTS report, which tracks labor market churn, shows hires dipping and firings on the rise. Add to that recent consumer survey data, which suggests laid-off workers are finding it increasingly difficult to find replacement gigs.