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(CEP News) - U.S. initial jobless claims are expected to remain elevated well above the 400k threshold usually considered "recessionary," even according to the most optimistic forecasts for the week ending Aug. 16. However, the last three reports have been widely dismissed because new laws that make it easier to file a claim have distorted the figures.
The consensus is calling for initial jobless claims to fall 10k to 440k in the week. Forecasts range as high as 470k - a 20k gain from last week - and as low at 335k - the lowest figure since mid-January. Paul Ferley, assistant chief economist at RBC Capital Markets, said jobless claims will be the most important news item of the day in the U.S. He said markets have been surprised by the recent upward trend, but traders are skeptical about the reliability of the index. Ferley said a figure much better than expected - fewer than 400k - would capture the market's attention and give reason to question the recent spike in initial claims. This week's data will also receive some extra attention because it's the survey week for the nonfarm payrolls report for August, to be released September 5. Continuing claims, which are considered more reliable, have been on a steady rise in recent months. The level as of Aug 2 was 3.417 million, an increase of 114k from the preceding week's revised level, marking the fifteenth week above the three-million mark. The four-week average for continuing claims also rose to 3.199 million. Economists say the rise in continuing claims suggests the labour market is weakening on both fronts, as people who have lost their jobs are finding it difficult to find new employment. After last week's report, TD Securities senior economics strategist Charmaine Buskas said, "It continues to be difficult to sort out the true trend from the structural factors pushing claims higher, but that said, it is an overall bad report and suggests ongoing weakness in the labour market." By Patrick McGee,
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