Weekly preliminary claims reached a four-week average …

Preliminary claims for regular state unemployment insurance fell 3,000 in the week ended June 11, to 229,000. The previous week’s revised from 232,000 to 229,000 and had the highest result since January 15 (see first chart). By long-term historical comparison, the initial claims are very low.

However, the four-week average has risen for the ninth time in the last ten weeks, coming in at 218,500, up 2,750 from the previous week and the highest level since March 12th. Weekly preliminary demand data suggests a very tough labor market, although the recent upward trend is a growing concern. Russia’s aggression in Ukraine, periodic lockdowns in China, and an intensified Fed tightening cycle will have an impact on the world economy in the coming months and represent a risk to the economic outlook.

The total number of ongoing claims for the state unemployment program for the week ended May 28 was 1.256 million, an increase of 1,639 from the previous week (see Chart 2). State continued claims have now doubled in the last three 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 May 28 at 1.282 million, down 1,441 from the previous week. The latest result is below 2 million in the 16th 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 could be an early warning sign if the trend continues on an upward trajectory.

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.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy that combines 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.

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