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A decline in initial jobless claims for both regular and Pandemic Unemployment Assistance benefits alongside a drop in continuing claims suggests the jobs recovery has not gone into reverse, explained analysts at Wells Fargo. 

Key Quotes: 

“By a number of accounts the jobs recovery has lost momentum over the past month, but the latest jobless claims figures hint at conditions stabilizing if not improving once again. Initial claims fell to 1.19 million for the week ending August 1. Seasonal adjustment is tricky for the claims data in July due to the varying degree and timing of auto plant shutdowns, but the 4-week average on initial claims signaled some modest improvement on trend.”

“Initial claims for the Pandemic Unemployment Assistance program also posted the biggest weekly drop since late May. Continuing claims for the week ending July 25 more than reversed the prior week’s rise. In short, new layoffs and the ranks of the unemployed remain strikingly high, but today’s report alleviates concern that the jobs recovery has gone into reverse.”

“There remains a massive degree of uncertainty around estimates for payrolls tomorrow given the fast-moving and unprecedented scale of changes in the labor market in recent months.”