Initial claims for unemployment insurance continue to drift mostly sideways, trapped in the 200,000-250,000 range where it’s been for about three years. But the ranks of those collecting checks continue to grow to multi-year highs.
Last week, 227,000 U.S. workers joined the queue outside the unemployment office, landing 8,000 short of economists’ predictions.
It marks a 2.2% drop from the prior week, and the underlying trend, as measured by the four-week moving average of initial claims, has a slight downward bias, suggests layoffs are on the wane, for now.
The data “remain consistent with a labor market characterized by both a slow pace of hiring and relatively few private-sector layoffs,” writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “For now, the labor market is healthy enough to allow the Federal Reserve to keep interest rates unchanged as it assesses the impact of tariffs on inflation.”
On the other hand, ongoing jobless claims, reported on a one-week lag, edged 0.5% higher to 1.965 million, or 9,000 more than analysts expected. Continuing claims remain very elevated, gliding along near levels not seen since December 2021, when the labor market was still dragging itself from the COVID abyss.
The data supports recent consumer survey data suggesting laid off workers are finding it increasingly difficult to find a replacement gig.
“The ongoing upward trend in continuing claims points to a high chance that the unemployment rate will rebound in July,” says Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
“We continue to expect the unemployment rate to rise more quickly in the second half of this year than the FOMC expects,” Tombs adds. “Labor demand is continuing to decline… the rate of layoffs in (the) federal government also likely will pick up, following the Supreme Court’s recent judgment.”
Source: Reuters
