The initial claim for regular state unemployment insurance fell 2,000 in the week ended June 25, to 231,000. The previous week was revised from 233,000 to 229,000 (see first chart). By long-term historical comparison, initial claims are very low but have increased significantly since hitting a low of 168,000 for the week ended April 1, 2022.
The four-week average has risen eleven times in the fourth consecutive week and in the last twelve weeks, coming in at 231,750, up 7,250 from the previous week and at its highest level since November 26, 2021. Weekly initial demand data suggests a very tight labor market, although the recent upward trend is a growing concern.
The number of ongoing claims for the state unemployment program was a total of 1.286 million in the week ended June 11, an increase of 17,836 from the previous week (see second chart). State continued claims have now risen for three consecutive weeks and four in the last five 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 11 at 1.314 million, up from 1.297 million in the previous week. The latest result is below 2 million in the 18th week.
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.
Nevertheless, the overall low level of demand combined with the high number of open jobs has left the labor market very tense. The tight labor market is one of the strongest parts of the economy, providing support for consumer spending. However, continued price increases are affecting consumer sentiment and consumers may begin to moderate spending despite having 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.
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.