- by New Deal democrat
Probably the brightest spot in the entire economy right now is initial jobless claims. Contrary to the general theme of deceleration which has been the case for several years now, initial claims appear to be breaking trend in the positive direction.
Specifically, initial claims declined -7,000 last week to 221,000, their lowest reading since the end of March. The four week moving average declined -6,250 to 229,500, the lowest since the beginning of May. With the typical one week delay, continuing claims rose 2,000 to 1.956 million:
On the YoY% basis more useful for forecasting, initial claims were down -7.9%, and the four week average down -1.6%, only the 3rd time in the past 10 months that this comparison has been lower, and the biggest YoY decline during that time. Only continuing claims remained higher, by 4.8%:
This tells us that there are very few layoffs, even if those who are laid off are having a more difficult time landing a new job. (More on that in my report on this morning’s retail sales number).
Finally, let’s take our first look at how this month’s jobless claims report so far might affect the unemployment rate in the next couple of months:
Remember that unemployment claims tend to lag initial claims, so even though the last several weeks have been very good, the increase in claims during June is still likely to contraindicate downward pressure on the unemployment rate at least for another month.
One important caveat: just as the huge surge in immigration in 2021-23 distorted the unemployment rate to the upside, it is likely that immigration has slowed to a trickle this year, plus deportees do not file jobless claims, so there might well be a contrary distortion to the downside in the unemployment rate this year.
