Thursday Jobless Report
It looks like the Federal Reserve may be getting what they want, as initial unemployment claims rose to a 5 month high.
The numbers are still decent, and one week does not make a trend, but when juxtaposed with news that home sales falling sharply, also because of the interest rate increases, it does seem to indicate a potential downturn:
Initial jobless claims, a proxy for layoffs, increased by 27,000 to 229,000 last week from the previous week’s revised level of 202,000, the Labor Department said Thursday. Claims had been at or below the 2019 average of 218,000 since late January.
The four-week average of new claims, which smooths volatility in the weekly figures, also rose slightly to 215,000 last week. That figure hasn’t decreased since early April.
Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, remained at 1.3 million in the week ended May 28 — the lowest point since December 1969. Continuing claims are reported with a one-week lag.
Recent claims increases can be attributed to seasonal factors being thrown off balance because of the Covid-19 pandemic, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. Memorial Day also fell on Monday last week, shortening the number of workdays. Claims figures can be more volatile around holidays.
The U.S. labor market remains strong but is showing some initial signs of cooling. U.S. employers added 390,000 jobs in May — a robust gain that also was below the average monthly pace of growth over the past year. The unemployment rate held steady at 3.6%, nearly matching the half-decade low reached right before the pandemic hit the U.S. in the spring of 2020.
I’m not sure where this is going but I’ve got a bad feeling about this.