Initial claims for regular state unemployment insurance rose by 7,000 in the week ending July 16.th, rising to 251,000. The previous week’s 244,000 was unchanged from the original count (see first chart). Weekly claims are at their highest level since November 13th.th. However, when compared to the long-term history, initial requirements remain very low (see second chart).
The four-week average has risen for the fourteenth time in the past fifteen weeks (the four-week average has not changed in one week), to 240,500, up 4,500 from the previous week, and reaching its highest level since December. Weekly Initial Applications data continues to point to a very tight job market, although the recent strong uptrend points to some easing. The continued elevated pace of price growth, the intensifying Fed tightening cycle and the fallout from the Russian invasion of Ukraine pose risks to the economic outlook.
The number of current applications for participation in state unemployment programs for the week ended July 2 was 1.325 million.without date, which is 47,074 less than the previous week (see third chart). Ongoing claims by states have declined in two of the last eight weeks (see chart three).
According to the latest results from the combined federal and state programs, the total number of people claiming benefits from all unemployment programs was 1.353 million for the week ended July 2.without date, which is 47,842 less than the previous week. The latest result for the twenty-first week in a row is below 2 million.
Initial applications remain at a very low level compared to the previous period, but there is a clear upward trend, indicating that the labor market has begun to weaken. Weekly initial UI claims are a leading indicator of AIER and remained positive in the June update. However, given the upward trajectory, it will likely return to a neutral position in the next updates. In addition, the number of open vacancies in the country has been declining for two months in a row, although by historical standards this level remains very high.
While the overall low level of applications, coupled with a large number of job openings, suggests that the labor market remains resilient, both indicators are showing signs of easing. A tight labor market is a critical component of the economy supporting consumer spending. However, sustainedly higher rates of price growth are already affecting consumer attitudes, and if consumers lose confidence in a tough labor market, they can cut spending significantly. The outlook remains highly uncertain.
Robert Hughes
Robert Hughes joined AIER in 2013 after over 25 years of economic and financial market research on Wall Street. Bob previously led the Global Equity Strategy division of Brown Brothers Harriman, where he developed an equity investment strategy that combines macro downside analysis with upside fundamentals.
Prior to joining BBH, Bob was Senior Equity Strategist at State Street Global Markets, Senior Economic Strategist at Prudential Equity Group, and Senior Economist and Financial Markets Analyst at Citicorp Investment Services. Bob holds an MA in Economics from Fordham University and a BA in Business from Lehigh University.
