EmailThe initial claims level increased from 420,000 for the week ending June 11 to 429,000 for the week ending June 18. The Briefing.com consensus expected the initial claims level to decline to 413,000.
The Labor Department indicated that claims for Ohio, Mississippi, Oregon, New Hampshire, Washington, and the Virgin Islands had to be estimated due to technical problems. However, there tends to be very little material difference between estimates and actual results and we do not expect significant revisions to this week's data in later reports.
Initial claims have remained above the upper bound (410,000) of our "Recovery Zone" for 10 out of the last 11 weeks. During the entire month of April, the initial claims level was boosted by artificial and one-time exogenous factors. These "problems" were corrected by the first week of May, but claims have not returned to their March lows. Typically, claims return to previous levels within three weeks of the end of the special factors. That has not happened.
As a result, the initial claims level is pointing not only toward a hesitation in business expansion, but, more importantly, to a weakening in overall economic conditions.
Unless claims drop precipitously over the next few weeks, there is a strong possibility that payroll gains in the next month or two will not exceed the 100,000 needed to support normal labor force growth and a stable unemployment rate.
The continuing claims level decreased slightly from 3.698 million for the week ending June 4 to 3.697 million for the week ending June 11. The consensus expected continuing claims to fall to 3.680 million.
