Initial jobless claims last week were unchanged at 264,000, remaining at their highest level since November 2021 as the robust labor market showed signs of softening.
The data, reported by the Labor Department on Thursday, suggested that the previous spike in new filings for jobless benefits in the first two weeks of June—to above 260,000 from an average of 230,000 in May—was not a fluke.
That pushed the 13-week moving average—our preferred measure for the long-term trend—to 242,000, 21% higher than its recent low of 200,000 last November.
The fast increases in new claims fell within a range that should give the market more concerns over a potential recession.
Since the series was first recorded in the 1960s, the economy has been either months into a recession or fast approaching one when the 21% threshold is surpassed.
There are signs that some of the increase last week might be subject to further revisions because of suspicious activity in California and Texas, where new claims spiked on a nonseasonally adjusted basis. Claims increased by more than 7,000 in California last week and by more than 8,000 in Texas in the past two weeks.
But even without those 15,000 claims, June’s average remains significantly elevated compared to May’s average.
The impact of last week’s new claims number together with layoffs in the first two weeks of June alone imply a marked slowdown in June’s job data, which will come out in two weeks.
If that holds true, we should see more challenges to the Federal Reserve’s recent statements that it is likely to raise its policy rate two more times this year.
Continuing claims, however, unexpectedly dropped by 0.7% for the week ending June 10. Still, continuing claims were 30.3% higher than a year ago, another concern beside the growth in initial claims.
