ECONOMIC DATA ANALYSIS

Initial Jobless Claims (July 31st)

• Initial jobless claims were significantly higher than expected, rising 19,000 to 479,000 in the week ending
July 31st. The four-week average of claims increased 5,250 to 458,500.

• Continuing claims fell 34,000 to 4.537 million in the week ending July 24th and the insured unemployment
rate was unchanged at 3.6%.

• In addition to state claims, the Federal Emergency Unemployment Compensation program had 3.315
million claimants in the week of July 17th (an increase of 61,000 from the prior week; these data are not
seasonally adjusted).

Initial Claims Continuing Insured EUC 2008

Latest 4-week avg. Claims Unemploy. Claims (NSA)
26-Jun 475 467 4434 3.5 3888
3-Jul 458 467 4710 3.7 3484
10-Jul 427 455 4484 3.5 3254
* 17-Jul 468 457 4571 3.6 3315
24-Jul 460 453 4537 3.6 n.a.
31-Jul 479 459 n.a. n.a. n.a.
*employment survey week

BOTTOM LINE: Unemployment claims are highly volatile (especially around the distortions caused by the
summer shutdowns in early July), which makes it difficult to extract the economic signal from the noise. The
rise in initial claims, if sustained, would be a worrying sign for the recovery (although a pickup in layoffs has
not been signaled by Challenger layoff announcements, which have been at levels normally consistent with
solid expansion). The four-week average of claims, at 458,500, is in the range that has held since March (a
level that we had previously judged to be too high to signal sustained job creation, but we have seen private
payroll gains averaging 100,000 per year in the first six months of 2010). With ISM employment improving
for both manufacturing and nonmanufacturing and with layoff announcements low, we are not going to
overreact to this jobless claims report (but we would be concerned if we saw two or three more reports in
August suggesting that the rise in claims at the end of July has been sustained). We continue to look for
private payrolls to have increased by 100,000 in July (total payrolls down 50,000, however, on a decline in
Census workers).

John Ryding Conrad DeQuadros

ryding@rdqeconomics.com dequadros@rdqeconomics.com
(212) 584-3881 (212) 584-3882
August 5, 2010
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