Preliminary claims for regular state unemployment insurance fell 8,000 in the week ended May 21, coming in at 210,000 (see first chart). In four of the last seven weeks, demand has now dropped but declined, averaging -5,000, much smaller than the three increases that averaged 20,000. In the last seven weeks, the initial claim net has increased to 42,000. However, by long-term historical comparisons, initial claims remain extremely low.
The four-week average rose for the seventh week in a row, coming in at 206,750, up 7,250 from the previous week and the highest level since March 12th. 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 total number of ongoing claims for the state unemployment program for the week ended May 7 was 1.281 million, down 49,777 from the previous week (see second chart). State claims have dropped to 15 in the last 17 weeks and are below their pre-epidemic level of 2.111 million since October 2021 (see Chart 2).
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 May 7 at 1.317 million, down 54,282 from the previous week. The latest result is in the 13th week in a row below 2 million.
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.