EmailThe initial claims level fell from 428,000 for the week ending May 21 to 422,000 for the week ending May 28. The Briefing.com consensus expected the initial claims level to fall to 413,000.
The weakness in the claims data cannot be ignored or discounted any longer. Claims are now pointing directly at a stalled labor market recovery.
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.
With claims remaining above not only the March lows but also above the upper bound (410,000) of our "Recovery Zone," 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. As a result, unless more workers leave the labor market, we expect the unemployment rate to start inching higher again.
The continuing claims level fell from 3.712 million for the week ending May 14 to 3.711 million for the week ending May 21. The consensus expected continuing claims to fall to 3.688 million.
