After dropping to YTD lows last week - despite payrolls data showing a weakening labor market - initial jobless claims were expected to rebound modestly in the latest data... but they didn't.

Whatever magic they are using pushed the seasonally-adjusted initial claims data to its lowest since February and the non-seasonally-adjusted claims to their lowest since Oct 2022...

(Click on image to enlarge)

Once again, we think it is important to remember that two distortions that likely boosted initial claims over the last few months - potentially fraudulent filings in Ohio and expanded eligibility for unemployment insurance in Minnesota - and that has begun to unwind in recent weeks...

Source: Bloomberg

In fact, for the 3rd week in a row, Ohio saw the biggest decline claims as fraud was erased...

Continuing jobless claims also plunged last week - back below 1.7mm - to 1.679mm Americans, equal to the lowest level since January...

Source: Bloomberg

And at the same time, employment cost growth for Q2 were revised higher to +2.2% QoQ SAAR.

As a reminder, the unemployment rate is now at its highest since Feb 2022...

Source: Bloomberg

Do you believe in magic?

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