Initial Jobless Claims Rise Slightly, Unemployment Steady, Pending Home Sales 3-Month Avg. Best in Over 4 Years

- Initial Jobless Claims for this week rose to 455K versus estimates of 425K and 448K the prior week.

- Continuing Claims rose to 3311K versus estimates of 3255K and 3280K prior.

- Pending Home Sales for June rose 5.3% versus estimates of a -1.0% decline and a -4.9% decline in May.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits rose slightly last week, Bloomberg reported. Some workers filing for extended benefits under a government-spending bill that was signed by President Bush in June were deemed eligible to enter the program as first-time claimants, according to the Labor Dept. That may have led to the jump in applications over the last few weeks, he said. The government can’t quantify the impact on claims and applications will likely remain elevated for a few more weeks, the spokesman said. The four-week moving average of jobless claims rose to 419,500 from 392,750 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at 2.5% versus the long-term average of 2.9%. 38 state reported a decrease in jobless claims. Jobless claims will likely trend around current levels for a couple of weeks before decelerating during 4Q.

More Americans unexpectedly signed contracts to purchase previously owned homes in June, a sign that lower prices are drawing buyers back into the market, Bloomberg reported. Purchase contracts jumped 9.3% in the South, 4.6% in the West, 3.4% in the Northeast and 1.3% in the Midwest. The three-month average of Pending Home Sales is +2.5%, which is the best level since March 2004. This is a large positive. I continue to believe overall home sales have bottomed and will trend modestly higher through year-end, which should make a significant dent in inventories.