Weekly initial claims continue to rise
Initial claims for regular state unemployment insurance fell by 16,000 in the week ending Nov. 26.th, reaching 225,000. The previous week’s 241,000 was revised upwards from the original estimate of 240,000 (see first chart). The four-week average of weekly initial claims rose to 228,750, up 1,750 for the week. This is the fifth increase in the last seven weeks and the highest level since September 3rd.rd (see first diagram).
Measured as a percentage of nonfarm payrolls, applications were 0.140% in October, up from 0.136% in September 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 been on the rise lately, heightening concerns about a growing trend in initial claims (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 12 was 1.338 million.th, which is 111,080 more than the previous week (see fourth chart). State ongoing claims are at their highest level since Aug. 27.th but remain between 1.2 million and 1.5 million (see fourth chart).
According to the latest results from the combined federal and state programs, the total number of people claiming benefits from all unemployment programs was 1.368 million people for the week ended November 12.thwhich is 115,477 more 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 cuts are a cause for concern. 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 attitudes, and if consumers lose confidence in the labor market, they can cut spending significantly. The outlook remains highly uncertain.