Jobless Claims Fall Slightly Signaling Tight Labor Market

June 16, 2022 – The Labor Department reported that 229,000 Americans have filed new claims for state unemployment benefits, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 229,000 to 232,000. The four-week moving average was 218,500, an increase of 2,750 from the previous week’s revised average. The previous week’s average was revised up by 750 from 215,000 to 215,750.

The advance seasonally adjusted insured unemployment rate was 0.9 percent for the week, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week was 1,312,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up 3,000 from 1,306,000 to 1,309,000. The four-week moving average was 1,317,500, a decrease of 750 from the previous week’s revised average. This is the lowest level for this average since January 10, 1970 when it was 1,310,250. The previous week’s average was revised up by 750 from 1,317,500 to 1,318,250.

Today’s data also follows projections from the Federal Reserve published Wednesday that indicate the unemployment rate is poised to rise a few tenths of a percentage point to 3.9 percent through the end of 2023. The May jobs report showed the unemployment rate at a historically low 3.6 percent. The Fed also raised interest rates by 75 basis points in an aggressive move against consumer inflation that is running at an 8.6 percent annual rate. Fed chairman Jerome Powell cited the robust labor market as one reason why he thinks the economy can handle higher interest rates.

“We are changing our base case forecast for next year from an economic soft landing to a mild recession starting in mid-2023,” Wells Fargo Securities chief economist Jay Bryson wrote on Wednesday. “Recent data suggest that inflation is becoming increasingly entrenched in the economy. High inflation is eroding real income, which likely will weigh on consumer spending growth in coming quarters.”

However, Mr. Bryson says any downturn “will be more or less equivalent in magnitude and duration to the downturn of 1990-1991. That recession lasted for two quarters with a peak-to-trough decline in real GDP of 1.4 percent.”

There were 5,411 continued weeks claimed filed by former Federal civilian employees the week, a decrease of 703 from the previous week. Newly discharged veterans claiming benefits totaled 4,012, a decrease of 321 from the prior week.

Related: Talent Shortages Reach Highest Levels in 16 Years 

The highest insured unemployment rates in the week were in California (1.8), New Jersey (1.8), Alaska (1.5), New York (1.4), Pennsylvania (1.3), Puerto Rico (1.3), Massachusetts (1.2), Rhode Island (1.2), Georgia (1.1), Hawaii (1.1), Illinois (1.1), and Oregon (1.1). The largest increases in initial claims for the week were in Florida (+2,098), Georgia (+2,060), Pennsylvania (+1,134), Missouri (+1,053), and Illinois (+827), while the largest decreases were in Michigan (-2,131), Mississippi (-1,723), New York (-631), Oklahoma (-598), and New Jersey (-440).

Job Cuts

Job cuts in the U.S. rose for a second month in a row in April as employers assessed costs and the growing risk of inflation in a labor market that has mostly seen record demand for workers over the past year, employment tracker Challenger, Gray & Christmas Inc. showed on Thursday.

U.S. employers announced 24,286 cuts last month, a 14 percent increase from the 21,387 tracked in March and up six percent from the 22,913 cuts monitored in April 2021, the firm’s latest monthly report showed. It was also the first time in a year when job cuts were higher than the corresponding month a year earlier.

“Job cut plans appear to be on the rise, particularly as companies assess market conditions, inflationary risks, and capital spending,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas. “Despite this, job openings are still at record highs. Workers who are being cut will have lots of opportunities and will likely land quickly.”

While job cuts rose for a second month in a row, the number of layoffs — 79,982 — were the lowest recorded in total between a January to April period, the data showed.

Separately, private payrolls processor ADP reported that private employers in the U.S. added 247,000 jobs in April, just about half of March levels and the smallest in two years as the labor market hovered at full employment.

Related: Unemployment Rate Holds Steady at 3.6 Percent

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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