Initial claims for regular state unemployment insurance rose by 6,000 for the week ending July 30, to 260,000. The 254,000 figure was revised last week down from the initial number of 256,000 (see first chart). When measured as a percentage of nonfarm payrolls, claims came in at 0.152 percent for June, up from a record low of 0.117 in March, but still very low (see second chart).
The four-week average has risen for the 16th time in the past 17 weeks (the four-week average is unchanged in one week), reaching 254,750, up 6000 from the previous week. The weekly initial claims data continues to point to a tight labor market, although the recent ongoing upward trend suggests some easing. Continued price hikes, the Fed’s severe tightening cycle, and the fallout from Russia’s invasion of Ukraine pose risks to the economic outlook.
The number of ongoing claims for government unemployment programs reached 1.444 million for the week ending July 16The tenth, down 3,412 from the previous week (see the third chart). Ongoing government claims have also been trending higher over the past several weeks (see chart three).
The latest results for joint federal and private programs put the total number of people claiming benefits in all unemployment programs at 1.473 million for the week ended July 16.The tenth, a decrease of 3,890 from the previous week. The latest result is the 23rd week in a row below 2 million.
Initial claims remain at a very low level by historical comparison, but a clear upward trend has emerged, indicating that the labor market has begun to recede on the sidelines. Weekly Initial Claims for Unemployment Insurance is a leading indicator for AIER, and it remained a positive contributor to the July update. However, given the upward trajectory, it will likely turn neutral in upcoming updates. Moreover, the number of open jobs in the country has declined for three consecutive months, although the level is still very high by historical comparison.
While the overall low level of claims coupled with the large number of open jobs indicates that the labor market remains strong, both metrics are showing signs of abating. A tight labor market is an important component of the economy, providing support for consumer spending. However, persistently high rates of prices do affect consumer attitudes, and if consumers lose faith in the labor market, they may significantly reduce spending. The prospects remain highly uncertain.