June 23, 2022

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Average Weekly Initial Claims Continue to Drift Higher

Initial claims for regular state unemployment insurance fell 2,000 for the week ending June 18, coming in at 229,000. The previous week’s 231,000 was revised up from 229,000 (see first chart). By long-term historical comparison, initial claims remain very low.

However, the four-week average rose for the tenth time in the last eleven weeks, coming in at 223,500, up 4,500 from the prior week and at the highest level since March 5th. Weekly initial claims data continue to suggest a very tight labor market, though the recent upward trend is a growing concern. The Russian invasion of Ukraine, sustained elevated price increases, and an intensifying Fed tightening cycle represent risks to the economic outlook.

The number of ongoing claims for state unemployment programs totaled 1.268 million for the week ending June 4, a rise of 12,621 from the prior week and the largest weekly gain since February 26 (see second chart). State continuing claims have now risen in three of the last four weeks though the level remains very low (see second chart).

The latest results for the combined Federal and state programs put the total number of people claiming benefits in all unemployment programs at 1.297 million for the week ended June 4, an increase of 14,479 from the prior week. The latest result is the 17th week in a row below 2 million.

Initial claims remain at a very low level by historical comparison, but recent weeks have seen an upward trend become more apparent. Weekly initial claims for unemployment insurance is an AIER leading indicator, and if the trend continues on an upward trajectory, it may be an early warning sign.

Still, the overall low level of claims combined with the record-high number of open jobs suggest the labor market remains very tight. The tight labor market remains one of the strongest parts of the economy, providing support for consumer spending. However, persistent price increases are weighing on consumer attitudes and may be starting to restrain consumer spending despite the strong labor market.

Labor shortages and turnover, along with materials shortages, logistical issues, and supply chain disruptions are likely to continue to hamper the growth in production across the economy and sustain upward pressure on prices. The outlook remains highly uncertain.