[ForexNews]

Initial jobless claims fell to 631,000 in the week ending May 16, from an upwardly revised 643,000 in the prior week. The four-week moving average slipped to 629,000 from 632,000. Last week, claims were boosted by auto-related furloughs and layoffs, particularly from the Chrysler bankruptcy. This led to a huge jump in claims in Michigan, more than half of the total increase in unadjusted claims. Based on commentary from the Department of Labor, the decline in the latest week reflected a partial reversal in those states with auto-related filings.

Continuing jobless claims jumped 75,000 to a record high of 6.66mn. About a third of continuing claims are through the Emergency Unemployment Compensation program, which extends benefits by 20 weeks for workers who have exhausted their regular unemployment insurance. The insured unemployment rate increased to 5.0% from 4.9%. Overall, the claims data points to further weakness in the labor market. Non-farm payrolls are likely to continue to contract, but at a slowing pace. Market expects the unemployment rate to climb to 9.8% by the end of the year.