Yesterday’s ADP report suggested a very bumpy jobs market and an unpleasant surprise in tomorrow’s BLS jobs report. However, today’s report on initial jobless claims ended up being a more pleasant surprise. After a rise in claims the previous week, claims in the week ending July 25 dropped sharply to 1.186 million, well below analyst expectations of a repeat from week ending July 18.

That is officially the lowest number yet reported in the COVID-19 pandemic, even though it’s still well over a million, far above previous non-pandemic records. The Department of Labor report contained even better news further in (emphasis mine):

In the week ending August 1, the advance figure for seasonally adjusted initial claims was 1,186,000, a decrease of 249,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 1,434,000 to 1,435,000. The 4-week moving average was 1,337,750, a decrease of 31,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 1,368,500 to 1,368,750.

The advance seasonally adjusted insured unemployment rate was 11.0 percent for the week ending July 25, a decrease of 0.6 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 25 was 16,107,000, a decrease of 844,000 from the previous week’s revised level. The previous week’s level was revised down by 67,000 from 17,018,000 to 16,951,000. The 4-week moving average was 16,628,250, a decrease of 413,250 from the previous week’s revised average. The previous week’s average was revised down by 16,750 from 17,058,250 to 17,041,500.

This has been the largely unreported good news this summer. Continuing claims require at least two consecutive weeks of paid benefits, which means at least three weeks without a job. Over the last two months, the number of people drawing unemployment benefits for two or more weeks has dropped by more than four million, suggesting a rapid redeployment back into jobs continuing right to the end of the month. Remember that none of those benefits had expired by the week ending July 25, so this was not a case of people getting dropped by congressional inaction.

CNBC noted the big win on expectations, as well as the drop in insured payouts. Rick Santelli and Steve Liesman celebrate a bit, while keeping the numbers in context:

Weekly jobless claims hit their lowest level of the pandemic area, totaling 1.186 million last week, well below Wall Street expectations.

Economists surveyed by Dow Jones had been looking for 1.42 million.

Amid worries that the employment picture was faltering after two record-breaking months of job creation, the claims number indicates some momentum. Continuing claims, or those who have collected benefits for two straight weeks, dropped by 844,000 to 16.1 million.

So how does this square with yesterday’s ADP report? Liesman makes a good point in the video by noting that ADP and the Bureau of Labor Statistics both do their surveys in the second week of the month, right when spikes in several states made it look like we might have to head back into shutdown mode. That might have created a short-lived stall in labor transactions while employers sheltered cash and other resources. This report might mean that the stall was just momentary and that the jobs markets have gone back to recovery when states didn’t overreact.

If true, then we can still expect tomorrow’s jobs report to be less than thrilling. The BLS would pick up on those same issues, which will mean that its estimates will overrepresent the hesitancy that ADP measured, assuming that their report is accurate. Today’s jobless claims report, and especially the paid-benefits numbers, more strongly suggest that the trends back to recovery remain in place.