Jobless claims edge up to highest since January; planned layoffs soar
Weekly jobless claims nudged higher while the U.S. trade deficit hit its lowest level of the year in May as Covid-related shutdowns gripped China, according to economic data released Thursday.
Initial filings for unemployment benefits totaled 235,000 for the week ended July 2, a gain of 4,000 from the previous period and slightly more than the 230,000 Dow Jones estimate, according to the Labor Department. The total was the highest since Jan. 15 and raised the four-week moving average to 232,500, its highest level since December 2021.
Continuing claims, which run a week behind, also moved up, rising 51,000 to 1.375 million, higher than the 1.337 million FactSet estimate.
Also on Thursday, job placement firm Challenger, Gray & Christmas reported that planned layoffs soared in June to 32,517, a 57% jump from a month ago and the highest total since February 2021.
nitial filings for unemployment benefits
The firm noted that the auto sector, which typically lays off this time of year, announced 10,198 cuts, bringing the yearly total to 15,578, or a 155% increase from the same period in 2021. Of the 30 industries the company follows, 10 have announced more cuts this year than in 2021.
Layoff announcements have soared in the second quarter after an extremely low level of cuts in the first three months of the year. Through June, the annual total of 133,211 is down 37% from a year ago, but the second quarter is the highest quarterly total since Q1 of 2021.
“Employers are beginning to respond to financial pressures and slowing demand by cutting costs,” said Andrew Challenger, the firm’s senior vice president. “While the labor market is still tight, that tightness may begin to ease in the next few months.”
Markets are watching Friday’s nonfarm payrolls report, which is expected to show a gain of 250,000. If that Dow Jones estimate proves accurate, it will be the lowest monthly gain since December 2020. Federal Reserve officials are watching the jobs numbers closely as they look to cool the labor market and broader economy, which is seeing its highest inflation rate since 1981.
On the trade front, the U.S. imbalance for goods and services declined to $85.5 billion, from $86.7 billion in April, according to government figures. Though it was the lowest of 2022, it was above the Dow Jones estimate of $84.7 billion.
The deficit was still up 38.4% from a year ago as demand for imports has far outstripped U.S. exports to the rest of the world.
As China grappled with a surge in Covid infections, the U.S. trade deficit with that country fell a seasonally adjusted $2.8 billion to $32.2 billion. The deficit with Mexico dropped $1.6 billion while the imbalance with Canada increased $900 million.