Initial jobless insurance claims totaled 260,000 last week, near the highest level since November amid a shift in the US job market.
The total for the week ending July 30 was in line with the Dow Jones estimate but up 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 narrowed to $79.6 billion in June, down $5.3 billion and slightly below the $80 billion estimate.
The jobless claims number comes a day before the Bureau of Labor Statistics releases its highly anticipated nonfarm payrolls report for July. It is expected to show the US economy added 258,000 positions in the month, compared with June’s initial estimate of 372,000 and the lowest total since December 2020.
A for rent sign is posted in the window of a Chipotle restaurant in New York on April 29, 2022.
Shannon Stapleton | Reuters
“The labor market remains in good shape as the summer quarter progresses, but the surge in initial claims since early April is a cool breeze blowing into the hot labor market this summer,” said Stuart Hoffman, economic adviser. principal of PNC Financial Services.
Federal Reserve officials are closely watching the labor market for clues about an economy showing the highest rate of inflation in more than 40 years.
Jobless claims had been hovering around their lowest levels since the late 1960s, but began to rise in June as inflation pressures mounted and companies began to cut hiring. Even with strong hiring in 2021 and the first half of 2022, the total employment level is 755,000 below 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 change in the labor market. That number is up 6,000 from the previous week to 254,750, well above the recent low of 170,500 on April 2 and the highest level of the year.
Continuing claims, a week behind the headline figure, totaled 1.42 million, up 48,000 from the previous week and 83,000 since early July.
Trade deficit breaks record high
On the trade side, the smaller deficit reflects a return to a more normal environment after the US deficit with its global trading partners hit a record $107.7 billion in March.
Exports increased $4.3 billion while imports decreased $1 billion. However, the goods deficit with China increased by $4.7 billion to just $37 billion. Imports of vehicles, auto parts and engines decreased by $2.7 billion, while capital goods increased by almost $1 billion.
Even with the deficit narrowing in June, it is still 33.4% higher than a year ago, as domestic supply has failed to keep pace with strong demand. That has fueled an inflation rate that is at its highest level since the early 1980s.
The Federal Reserve has instituted a series of four interest rate hikes this year totaling 2.25 percentage points, in part as an effort to curb some of that pandemic-era demand. New inflation figures are due out next week, after June’s consumer price index showed a 9.1% rise in 12 months.