Weekly average initial claims hit highest level since September

Initial claims for regular state unemployment insurance rose by 4,000 in the week ended Dec. 3.rd, going up to 230,000. The previous week’s 226,000 was revised up from the original estimate of 225,000 (see first chart). Weekly initial claims have risen in seven of the last twelve weeks.

On a four-week average, initial claims per week rose to 230,000, up 1,000 in a week. It was the eighth increase in the last ten weeks and the highest level since September 3rd.rd (see first diagram).

Measured as a percentage of non-farm payrolls, November claims were 0.145%, up from 0.140 in October and above the record low of 0.117 in March (see second chart). Although the rate of weekly initial jobless claims remains very low compared to past periods, the upward trend is worrying.

Announcements of job cuts have increased in frequency recently, adding to concerns about a growing trend in initial claims. Job cut announcements jumped to 76,835 in November from 33,843 in October, the highest level since January (see chart three). While data continues to point to labor market tightness, continued elevated price growth, an aggressive Fed tightening cycle and the fallout from Russia’s incursion into Ukraine remain risks to the economic outlook.

The number of current applications for participation in state unemployment programs for the week ended November 19 was 1,258 million.th, which is 79,919 less than the previous week (see fourth chart). The state’s ongoing claims remain in the range of 1.2 million to 1.5 million (see chart four).

According to the latest results from the combined federal and state programs, the total number of people claiming benefits from all unemployment programs was 1,284 million people for the week ended November 19.thwhich is 83,896 less than the previous week.

While the overall low level of initial claims indicates that the labor market remains tight, the upward trend in claims and the increase in job layoffs are worrying. A tight labor market is a critical component of the economy supporting consumer spending. However, ever-increasing rates of price growth are already affecting consumer expectations for the future, and if consumers lose confidence in the labor market, they can cut back significantly. The outlook remains highly uncertain.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 after over 25 years of economic and financial market research on Wall Street. Bob previously led the Global Equity Strategy division of Brown Brothers Harriman, where he developed an equity investment strategy that combines downward macro analysis with upward fundamentals.

Prior to joining BBH, Bob was Senior Equity Strategist at State Street Global Markets, Senior Economic Strategist at Prudential Equity Group, and Senior Economist and Financial Markets Analyst at Citicorp Investment Services. Bob holds an MA in Economics from Fordham University and a BA in Business from Lehigh University.

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