In the week ending June 18, the initial claims for regular state unemployment insurance fell by 2,000, to 229,000. The previous week’s correction was from 231,000 to 229,000 (see first chart). By long-term historical comparison, the initial claims are very low.
However, the four-week average has risen for the tenth time in the last eleven weeks, coming in at 223,500, up 4,500 from the previous week and the highest since March 5. Weekly preliminary demand data suggests a very tough labor market, although the recent upward trend is a growing concern. Russia’s aggression in Ukraine, sustainable inflation, and an accelerated Fed tightening cycle represent risks to the economic outlook.
The number of ongoing claims for the state unemployment program was a total of 1.268 million in the week ended June 4, an increase of 12,621 from the previous week and the largest weekly profit since 26 February (see chart 2). State continued claims have now risen to three in the last four weeks although the level is very low (see second chart).
The latest results from the combined federal and state programs put the total number of people seeking benefits in all unemployment programs for the week ended June 4 at 1.297 million, an increase of 14,479 from the previous week. The latest result is below 2 million in the 17th week.
Early claims have remained very low compared to historical comparisons, but an upward trend has become more apparent in recent weeks. Weekly initial claims for unemployment insurance are an AIER leading indicator, and if the trend continues to move upwards, it could be an early warning sign.
Nevertheless, the overall low-level demands combined with the record-high number of open jobs suggest that the labor market remains very strong. The tight labor market is one of the strongest parts of the economy, providing support for consumer spending. However, persistent price increases are affecting consumer sentiment and may begin to moderate consumer spending despite a strong labor market.
With labor shortages and turnover, material shortages, logistical problems, and supply chain disruptions are likely to hamper productivity growth in the economy as a whole and keep upward pressure on prices. The outlook remains highly uncertain.