Initial claims for regular state unemployment insurance rose 21,000 in the week ended May 14, coming in at 218,000 (see first chart). The latest results are the highest since January 22. Demand has now risen in four of the last eight weeks, and for the first time since January 28, the January-February 2020 average is above 212,000. However, compared to the long-term history, the initial claim is very low.
The four-week average rose for the sixth week in a row, coming in at 199,500, up 8,250 from the previous week. Weekly initial demand data suggests a very tough labor market, although the recent upward trend is a concern. Russia’s invasion of Ukraine, a new lockdown in China and a new Fed tightening cycle could derail the global economy for months to come.
The number of ongoing claims for the state unemployment program was 1.330 million in the week ended April 30, down 72,166 from the previous week (see second chart). State claims have dropped to 14 in the last 16 weeks and are below their pre-epidemic level of 2.111 million since October 2021 (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 April 30 at 1.371 million, down 68,885 from the previous week. The latest results are below 2 million in the twelfth consecutive week.
Early claims have remained extremely low by historical comparisons, but an upward trend has become more apparent in recent weeks. The trend may be temporary or may be an early warning sign Overall low-level demands combined with record-high number of open jobs suggest that the labor market remains very tight. The tight labor market remains one of the strongest parts of the economy, providing support for consumer attitudes and consumer spending. However, continued price increases have begun to work against consumer sentiment.
With persistent labor shortages, material shortages and logistical problems, it could hinder productivity growth in the economy as a whole and maintain upward pressure on prices. Also, Russia’s aggression in Ukraine, a new lockdown in China, and the start of a new Fed austerity cycle will continue to weigh on global economic activity. The outlook remains highly uncertain.