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Data released on Thursday showed initial and continuing jobless claims dropped to the lowest level since April. With the trend inching down only gradually and a drove of layoff announcements in recent days even as the economy has “re-opened,” the recovery remains precarious, explained analysts at Wells Fargo. 

Key Quotes: 

“The labor market’s recovery remains painfully slow. Initial filings for unemployment benefits through regular state programs fell to 837K from 873K the prior week. Looking at the four-week moving average—now clear of the break from changes to the seasonal adjustment process—the trend is improving more modestly. At the same time, applications for the new Pandemic Unemployment Assistance (PUA) program, which covers gig workers and the self-employed, rose last week.”

“Initial jobless claims remain higher than at any week during the Great Recession even as the economy has “re-opened.””

“Tomorrow’s employment report should show further gains in the labor market, but at a notably slower pace. Non-seasonally adjusted initial claims fell 94K between the survey weeks. That compares to an average decline of about 20K for the same period the prior five years, but is notably smaller than the drop that occurred ahead of the August survey week.”

“We estimate that 820K jobs were added last month, down from 1.37M in August. Beyond September, however, the outlook for job growth looks increasingly tenuous as claims remain stuck at an exceptionally high level and layoff announcements are coming in droves.”