The unemployment insurance weekly claims report revealed that the number of persons filing an initial claim rose 3,000 this past week to 608,000. While these are still very high numbers, they are the lowest since January, suggesting that claims have peaked in this cycle. Nevertheless, jobless claims are not falling back nearly as quickly as they have done in previous business cycles, making it likely that a lack of employment gains will be a drag on growth for months to come.
Continuing claims also fell, but remain high at 6.687 million on a seasonally-adjusted (SA) basis and 6.059 million on an unadjusted basis. In general, this report has affirmed a number of downward trends in both adjusted numbers and unadjusted numbers.
- 4-week average initial claims are 615,750, the lowest since February.
- However, 4-week average continuing claims are 6.75 million, still the highest ever.
- The increase in 4-week average unadjusted initial claims is now at its lowest level since December at 206K. While this shows claims are greater than at this time last year, this figure is a leading indicator and has never fallen this far and reversed direction.
- The increase in 4-week average seasonally-adjusted initial claims is also falling, now at the lowest levels since January.
- For continuing claims the same year-on-year dynamic is also in place for the first time with seasonally-adjusted claims (increase is now happening at a slower rate). The unadjusted year-on-year change has been falling for 5 weeks.
Conclusion? The job market is still weak. The unemployment rate will easily hit 10% in the coming months. As a result, expect consumer demand to be weak. Nevertheless, the job market is marginally improved and most indication suggest this is likely a permanent but slow trend.