The job market in the United States continues to soften. According to new unemployment numbers released last Thursday, continuing unemployment claims hit a new cycle high during the week of June 14. According to Bloomberg:
Recurring applications for U.S. unemployment benefits rose to the highest since November 2021, extending a sharp increase over the past 1½ months and signaling more people are staying out of work for longer.
Continuing claims, a proxy for the number of people receiving benefits, increased to 1.97 million in the week ended June 14, according to Labor Department data released Thursday.
That was above all estimates in a Bloomberg survey.
The elevated level of continuing claims aligns with other surveys and data pointing to a slowdown in the labor market. This week a measure of job availabilities from a Conference Board survey that’s closely watched by economists fell to the lowest since March 2021.
Initial claims, however, decreased, to 236,000 in the week ended Saturday, lower than economists anticipated. And the four-week moving average of new applications, a metric that helps smooth out volatility, also dipped.
The sizable increase in recurring filings for unemployment insurance combined with stable initial claims suggest employers are hitting the brakes on hiring, but holding onto their existing workers.
Similar trends persist in the four-week moving average of claims, as well. We find a clear upward three-year trend in continuing claims, with the June 14 total hitting the highest since late 2021. If we exclude the covid period, we have to go back to March 2018 to find a higher number for continuing claims.
As the Bloomberg summary notes, it appears that employers are clearly “hitting the brakes on hiring, but holding onto their existing workers.” However, we should note that while employers may be holding on to existing workers, many are being downgraded to part time. As BLS noted earlier this month, full-time employment in May was down by 623,000 workers while part-time employment was up by only 33,000.
With the exception of the “covid panic” and the mandated lockdowns, etc., last week was the highest total for ongoing unemployment claims since early 2018:
This stagnation in employment is one reason why Donald Trump and other inflation doves like Christopher Waller continue to press the Federal Reserve to further force down the target policy interest rate. Unfortunately, price inflation continues to come in above the two-percent target, seven months after Fed economists wrongly predicted that price inflation was rapidly returning to the target. If the Fed intervenes to further push down the policy rate, this will only extend the financial bubbles that continue the current trend of inflating asset prices which has put housing out of reach for millions of Americans.