U.S. Jobless Claims Add Emphasis to Weak Employment Situation Report in June

US Economy | Written by CEP News | Jul 03 08 13:47 GMT |
(CEP News) - Excluding the final week of March, initial jobless claims hit a cyclical high at 404k in the week ending June 28, marking the fourth week in a row above 380k to put the four-week average at 390k.

The report was overshadowed by the nonfarm payrolls report, which saw a sixth month of declines, and adds even more evidence of continued broad-based deterioration in the labour market, economists said.


"Claims will likely rise further over the next few months and, sooner or later, the increase in the pace of layoffs is going to be reflected in a knockout payroll number," said Ian Shepherdson, chief economist at HFE.

"This leaves the four-week average up by 21,500 from the end of May," added Abiel Reinhart, U.S. economist at JPMorgan Chase.

Paul Ashworth, senior U.S. economist at Capital Economics, said "the jump in initial jobless claims to 404,000 last week from 388,000 indicates that we may yet see much bigger declines in employment in H2."

Continuing claims fell to 3.116 million for the week ending June 21, following a four-year high in the previous week's report, while marking the eighth consecutive week that continuing claims have been above the 3 million threshold. The four-week moving average is now 3.110 million.

"The rate of increase in continuing claims has moderated, but it is much too early to say whether they are leveling off," Reinhart said.

In addition, Ashworth called the nonfarm payrolls report "a timely reminder that the US economy remains desperately weak," adding that "the outlook for Q4 is beginning to look very grim."

He also said the sixth month of declines, which add up to 438k net losses in 2008, "would seem to be a long enough period to satisfy the NBER's definition of a recession as a prolonged downturn."

By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, ssussman@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it

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