1st-time Unemployment Insurance Claims Edge Up

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 222,000 1st-time claims for unemployment insurance for the week ended June 8, UP 3,000from the previous week’s upwardly revised 219,000 (from 218,000);
  • The four-week moving average of initial claims ROSE 2,500 to 217,750;
  • Four week moving average represented 0.144 percent of employment, UP from 0.142 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,695,000 for the week ended June 1, UP 2,000 from the previous week’s UPWARDLY REVISED 1,693,000; (from 1,682,000)
  • The four-week moving average of continued claims ROSE 7,750 to 1,683,250.

Trends:

  • Initial claims for unemployment insurance have increased for three straight weeks for the first time this year;
  • Four-week moving average of 1st-time claims rose after three straight weekly declines;
  • Continued claims rose for the second week in a row and fifth time in the last seven weeks

Data Source: Department of Labor https://oui.doleta.gov/press/2019/0613

Image result for unemployed

Something’s going on in the labor market.

While the number of first time claims for unemployment insurance remains low in historic terms, the increase in layoffs resulting in claims hint that employers are getting skittish. The nervousness was apparent in the Employment Situation report for May which showed a meager gain of 75,000 jobs (netting to zero when considered against the downward revisions for jobs growth in March and April).

While the Job Openings and Labor Turnover Survey (JOLTS) earlier this week showed a record level of hiring in April, it also showed total job separations for this year on pace to exceed 2018.

The slowdown in job growth adds to the growing sentiment that the 10-year expansion may have run its course (a polite way of avoiding the word “recession”).  The broad-based nature of the downward trend in job growth only adds to the concerns which will heighten interest in next week’s meeting of the Federal Open Market Committee. Beyond the interest-rate decision by the FOMC, next week’s meeting will be accompanied by the Fed’s quarterly economic projections. With its recent increases in rates, the FOMC has given itself some room to reduce the fed funds rate in an effort to avoid a slowdown.

The overall downward slope in hiring could be serious enough to warrant a rate cut as evidence of further weakening in an economy battered by a soaring federal deficit and the likelihood of higher consumer prices due to the Trump Administration’s ongoing trade wars.

Exacerbating the weak labor market data is its timing. The first quarter is usually a time of volatility in employment and unemployment as businesses – particularly retail – unwind year-end staffing increases. Each year since the Great Recession, at least one month in the first quarter has seen unusually small or large job growth. In February this year, for example, the Bureau of Labor Statistics reported growth of just 56,000 jobs after a gain of 312,000 jobs in January compared with three-month average job growth of 233,000 in the fourth quarter last year,

Similarly, in 2018, February showed a gain of 330,000 jobs (compared with a three-month average of 188,000). In 2017, BLS reported growth of 252,000 jobs in January, up from the three-month average of 171,000.

By contrast, apart from storm-related slowdowns, monthly job growth for the other three quarters has been in a much narrower range.

Weakening labor data isn’t the only directional arrow towards a possible broader slowdown. Gross Domestic Product growth – though 3.1 percent in the first quarter this year – has hovered just over or just under 2.0 percent for four of the nine quarters of the Trump presidency.

Combined, the two indicators suggest the FOMC might be compelled to step in.

You can hear Mark Lieberman every Friday at 6:20 am (EDT) am on the Morning Briefing on P.O.T.U.S. radio, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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