The 5k U.S. initial claims drop to 240k
The 5k U.S. initial claims drop to 240k in the final week of July trimmed the 11k bounce to 245k (was 244k) from 234k in the BLS survey week, leaving little in the way of claims distortions through the auto retooling period. Claims are well above the 44-year low of 227k in the President's Day week. Yet, claims have undershot the 2016 average of 263k in every week of 2017. Claims are averaging 242k in July, following similar prior averages of 243k in June, 241k in May, and 243k in April. The 234k BLS survey week reading sat toward the lower end of recent survey week readings of 242k in June, 233k in May, and 243k in April. Our 190k July nonfarm payroll estimate faces upside risk from still-firm consumer, producer, and small business confidence despite Q2 drop-backs, and analysts've seen a solid 217k average ADP rise in 2017 despite the lean 178k July increase. The tightening path in claims has stalled through the auto retooling period however, and vehicle sales and assemblies have remained weak since a big drop in Q1. for a discussion of the risks on Friday.