Unemployment Claims Up, Slightly, In US

First-time unemployment applications in the United States rose by roughly 4,000 to 248,000 in the last week (ending July 1), over the previous week.  The new figure is also higher than the consensus expectation of 243,000 with a four-week moving average in increasing to this number from 242,250.

In addition, the metric for continuing claims in the previous week (ending June 25) increased from a revised 1.948 million to 1.956 million.  This was also slightly higher than expectations, though it is still below the 2 million for the previous 11 consecutive weeks.  The four-week moving average, in this case, rose from 1.938 million to 1.945 million.

Also, the unemployment rate among workers who are eligible for benefits held at 1.4 percent on the week.

According to the Thursday release of the ADP National Employment Report, private sector payrolls increased by 158,000 in June, far down from the 230,000 created in the month of May and also far lower than the 185,000 which economists expected to be created in June. This report also identifies quite a spotty record for predicting nonfarm payrolls, but the modest June growth and steady rise in first-time applications might result in some great concern that the US labor market is losing a bit of steam.

The biggest increase for initial claims (for the week ending July 1) was in New Jersey, at more than 7,000. There was, however, a massive jump in California as well—jumping more than 4,000—with the biggest decrease reported in Pennsylvania.

Now, the Federal Reserve expects that the labor market will continue to strengthen over the coming months. This is despite the fact that new data suggests that the US labor market could be cooling a little; but the slight increase in claims is still lower than the historic total jobless claims. This peak of unemployment benefit applications actually occurred in the 1970s, during a time when the US population—and workforce—was much smaller.

It is also important to note that automakers often shut down assembly plants for a bit of annual planning during the beginning of July and this tends to increase unemployment claims a bit.  And, this year, companies like General Motors have extended the summer shutdown in an attempt to remedy slowing sales, and this could further contribute to the rise in claims.

 

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