A Modest Drop In Last Week’s Unemployment Filings

Jobless claims fell for the week through June 1, slipping 11,000 to a seasonally adjusted 346,000. That leaves the number of claims close to middling relative to the range for the last several months. Although the new filings have been moving sideways lately, it’s still encouraging that this series isn’t moving higher in the wake of wobbly data in other economic news.

One potentially worrisome sign is what appears to be a higher risk of stagnation for this series. New claims are again treading water, fluctuating around the 350,000 level. That’s roughly 50,000 more relative to the troughs reached in recent decades. Perhaps more progress is coming, but for now it’s clear that the decline in weekly jobless claims has come to a halt.

The trend looks considerably brighter on a year-over-year basis. Claims on an unadjusted basis dropped by nearly 10% last week vs. the year-earlier level. That’s a sign that the labor market continues to heal, even if it’s not obvious in the recent week-to-week data.

The primary message is that companies are still hiring and the number of workers losing their jobs is falling. But the recent round of weak economic reports—the ISM Manufacturing Index for May and personal income and spending for April, for instance—serves as a reminder that while the labor market is still expanding, the slow growth is at risk of slowing further. That point was underscored in yesterday’s ADP Employment Report for May, which reflects a pace of jobs growth that’s near the lowest levels in recent months.
Tomorrow’s payrolls update for May from the Labor Department will probably deliver similar news, as this preview implies. The economy continues to mint new jobs at a rate that’s high enough to keep growth alive, but it’s a rate that’s too low to inspire any confidence that the near-term outlook is going to be much different from recent history.