Initial claims for regular state unemployment insurance rose 4,000 in the week ended July 2nd, Coming in at 235,000. 231,000 from the previous week were unpaid from the initial tally (see first chart). By long-term historical comparisons, the initial claims remain very low.
However, the four-week average has risen for the twelfth time in the last thirteen weeks (the four-week average was unchanged), coming in at 232,500, up 750 from the previous week and the highest level since February 19.M. Weekly preliminary demand data suggests a very tough labor market, although the recent upward trend is a growing concern. The sustained high rate of inflation represents a risk to the economic outlook as a result of the Fed’s austerity cycle and Russia’s aggression in Ukraine.
The total number of ongoing claims for the state unemployment program for the week ended June 18 was 1.299 millionM, Up 12,535 from the previous week (see second chart). State continued claims have now risen to five in the last six weeks and are at their highest level since April 30MAlthough the level is very low by long-term comparison (see second chart).
The latest results from the combined federal and state programs put the total number of people claiming benefits in all unemployment programs for the week ended June 18 at 1.328 million.M, Up 13,570 from the previous week. The latest results are the highest since April 30thM But under 2 million in nineteen consecutive weeks.
Early claims remain at very low levels by historical comparison, but an upward trend has become more apparent in recent weeks. Weekly initial claims for unemployment insurance are an AIER leading indicator, and could be an early warning sign if the trend continues in an upward trajectory. Moreover, the number of open jobs in the country has declined for two consecutive months, although the level is much higher in terms of historical comparison.
Although the overall low-level demands combined with the high number of open jobs suggest that the labor market is very tense, both systems are showing signs of softening. Tight labor is an important component of the market economy, which provides support for consumer spending. However, the steady rate of price rise is already weighing on consumer attitudes, and if consumers lose confidence in the tight labor market, they can significantly reduce costs. The outlook remains highly uncertain.
Robert Hughes
Robert Hughes joined AIER in 2013 for more than 25 years researching economic and financial markets on Wall Street. Bob was previously head of Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy combining top-down macro analysis with bottom-up fundamentals.
Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.