Initial claims for unemployment insurance totaled 260,000 last week, near the highest level since November amid a shift in the US labor market.
The total for the week ended July 30 was in line with the Dow Jones estimate but a gain of 6,000 from the previous week’s downwardly revised level, the Labor Department reported Thursday.
In other economic news, the US trade deficit in goods and services decreased to $79.6 billion in June, down $5.3 billion and slightly lower than the estimate for $80 billion.
The jobless claims number comes a day before the Bureau of Labor Statistics releases its much anticipated nonfarm payrolls report for July. That is expected the show the US economy added 258,000 positions in the month, compared to the 372,000 initial June estimate and the lowest total since December 2020.
A sign for hire is posted on the window of a Chipotle restaurant in New York, April 29, 2022.
Shannon Stapleton | Reuters
“The labor market remains in good shape as the summer quarter progresses but the rise in initial claims since early April is a cold breeze blowing at the hot labor market this summer,” said Stuart Hoffman, senior economic advisor at PNC Financial Services.
Federal Reserve officials are watching the jobs market closely for clues about an economy that is showing the highest inflation rate in more than 40 years.
Jobless claims had been running around their lowest levels since the late 1960s but started ticking higher in June as inflation pressures swelled and companies started cutting back on hires. Even with robust hiring in 2021 and the first half of 2022, the total employment level is 755,000 below where it was in February 2020, the last month before the Covid pandemic hit.
The four-week moving average of jobless claims, which smooths out weekly volatility, reflects the shift in the jobs market. That number rose 6,000 from the previous week to 254,750, up sharply from the recent low of 170,500 on April 2 and the highest level of the year.
Continuing claims, which run a week behind the headline number, totaled 1.42 million, up 48,000 from the previous week and 83,000 from the beginning of July.
Trade deficit comes off record high
On the trade side, the lower deficit reflects a shift back to a more normal environment after the US shortfall with its global trading partners hit a record $107.7 billion in March.
Exports rose $4.3 billion while imports declined by $1 billion. However, the goods deficit with China rose $4.7 billion to just shy of $37 billion. Imports on auto vehicles, parts and engines declined $2.7 billion while capital goods increased nearly $1 billion.
Even with the June decline in the deficit, it is still 33.4% higher than a year ago as domestic supply has failed to keep up with strong demand. That has fueled an inflation rate running at its highest level since the early 1980s.
The Federal Reserve has instituted a series of four interest rate increases this year totaling 2.25 percentage points, in part an effort to curb some of that pandemic-era demand. Fresh inflation numbers will be released next week, after June’s consumer price index showed a 12-month increase of 9.1%.