US DATA: Claims Suggest Still Low Fire But Slightly Lower Hire Labor Market

Jobless claims were higher than expected in latest data for both initial and continuing claims. Initial claims are still relatively low historically and show little sign of worrying layoffs whilst continuing claims continue to point to tougher re-hiring prospects but not particularly worse than recent months. The latter is especially true when considering a sustained pattern of downward revisions.  

• Initial claims increased to 235k (sa, cons 225k) in the week to Aug 16 – a payrolls reference period – after an unrevised 224k.
• It’s the highest single week since the week to Jun 21 after some particularly low readings, leaving mixed comparison to recent payroll reference periods with just 221k in the July period after 246k in June.  
• The four-week average increased 4k to 226k for its highest since the first half of July but that’s still close to the 218k through 2019 when comparing with a historically tight labor market (especially when considering the covered employment pool is some 5.5% higher since then).  
• Continuing claims meanwhile also surprised higher with 1972k (sa, cons 1960k) in the week to Aug 9 after a downward revised 1942k (initial 1953k).
• This is technically a fresh high since late 2021 but we again warn about the puzzling trend of downward revisions to continuing claims data. At least the fifteen previous weekly reports were revised lower, including two weeks ago when continuing claims were first reported at 1974k before 1968k, still a recent high but only a small increase over the 1964k in June.
• As such, we’d classify the seasonally adjusted continuing claims data as suggesting a similar pace of deterioration to the past couple months rather than anything more meaningful, although the NSA data suggest a more notable cooling over the past month when comparing non-pandemic years.
• Taking a step back with a historical comparison, initial claims are averaging 8k above the 218k in 2019 when the u/e rate averaged 3.67% whilst continuing claims are close to the 2017 average of 1957k when the u/e rate averaged 4.36%. The latest u/e rate stood at 4.25% in July but remains close to the 4.15% averaged for over a year now.