The Labor Department released jobless claim reports for the last week in June this morning. The rate of initial claims rose to 235,000, an increase of 4,000 from the previous week. This is higher than the expected 230,000 applications for first-time unemployment benefit claims. It’s also the highest number of claims since January of this year.
Initial jobless claims statistics reflect those who are filing for unemployment for the first time. Continued claims are those who are already receiving unemployment benefits.
Economic experts suggest that these numbers show the labor market is moderating rather than strengthening.
While the labor market as of late has been relatively tight, the rise in numbers of jobless claims indicates that the tightness of the market is beginning to abate. Some experts believe that the rate of jobless claims is increasing due to rising interest rates, which could be forcing employers to lay off workers. Already, Tesla and Netflix announced that they would be laying off employees. Both companies have also seen a drop in their stock price in the first quarter of 2022.
The Labor Department released the data one day ahead of an expected jobs report for the month of June. Prognosticators have lamented that the upcoming report is likely to show that the United States added the lowest number of jobs during the previous month in at least twelve months. The report is also expected to show that the unemployment rate is holding steady at one of the lowest numbers in fifty years.
However, jobless claims continue to tick upwards. The four-week average of jobless claims – an economic measure that is meant to illustrate a lessening of volatility in a monthly series of jobless claims – will move up slightly to 232,500. This number has risen for twelve of the last thirteen weeks’ worth of data.
In states such as New York, California, and Michigan, jobless claims went up significantly. Those states have some of the largest jumps in the four-week jobless claims data.
Reuters reports that continuing jobless claims have risen by 51,000 for a total of 1.375 million nationwide. Announced layoffs, such as the ones at Netflix and Tesla, shot up by 57 percent.
Some experts believe that the claims may be somewhat distorted, as the Independence Day holiday may have prevented some states from turning in their data on Monday as is normal. Regardless, the labor market is beginning to lose the momentum it had just a few months ago.
It should be noted, however, that economists warn the jobless claims typically rise to 250,000 per week (initial claims) in order for these experts to say that the labor market might be in troubled waters.
It is possible that the data could be revised next week to account for the Independence Day holiday.
Economists believe that the job market could become more volatile in the weeks to come. One area in which there could be a sharp increase is the automotive industry, which usually closes after the July 4th holiday to “retool” assembly plants. However, the shortage of semiconductor chips has caused auto manufacturers to revamp how they carry out this maintenance work. Because this is the model the government uses to determine seasonal fluctuations in unemployment data, this could skew data.
Economists report that the housing and technology sectors have been cutting jobs; Tesla laid off hundreds of workers in June.
However, the data isn’t all bad news. Economist Nancy Vanden Houten says that “demand for workers is still historically high.”
At the end of May, there were 11.3 million job openings, or 1.9 jobs for every unemployed person.