Initial claims for Americans applying for first-time unemployment insurance edged lower by 6,000 to 216,000 for the week ended June 15, coming in below expectations for 220,000. Claims for the prior week were left unchanged at 222,000. The four-week moving average, which helps to smooth the week-to-week volatility and provide greater perspective around the trend, edged modestly higher to 218,750.
The degree of stability in the claims data is somewhat surprising, particularly given the ample evidence of the softening in the economy in recent months. With job creation stalling in May, the relative stability in jobless claims is a reassuring sign.
What’s particularly noteworthy is that layoffs have remained in a relatively stable range since early 2018, when the economy was growing at a much faster pace. That may be meaningful in deciphering what may be holding back stronger job creation today.
The fact that job openings outstrip the ranks of the unemployed at a time when job creation is slowing suggests that the problem may have as much to do with the difficulty in finding qualified workers as uncertainty around the economic landscape. Employers don’t appear to be so concerned about the near-term that they are expanding layoffs.
That’s not to completely dismiss the risk of the slowing economy to the jobs market. That risk is real. Still, the lack of a pronounced and prolonged uptick in initial claims suggests that recent anxiety over the near-term state of the economy and impact on employment may be overblown.
The bottom line is that the strength of the labor market continues to temper recent concerns around the state of the economy. While the pace of growth has certainly come down from its recent highs, solid labor market conditions supporting a strong consumer sector provides a solid base underneath the economy.
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