Even as initial jobless claims have stayed relatively steady recently despite major strikes, there are longer-term signs that the labor market is softening.
New filings for jobless claims inched down by 3,000 to 217,000 last week, up from 200,000 last month. But continuing claims—a measure of longer-term disruption in the labor market—showed a more concerning trend, rising for the seventh straight week to 1.83 million, near the recent high in April.
The increase suggested that workers who remain on unemployment benefits have had a harder time finding new jobs, unlike what happened during the same time last year.
And there is more room for new claims to rise as the economy is expected to slow down significantly in the final quarter. Temporary workers hired during the third quarter for various one-time events might be let go as demand cools.
Read more of RSM’s insights on the economy and the middle market.
The takeaway
There is no doubt that the underlying labor market conditions have been tighter, consistent with other measures such as quit rates and wage growth.
Still, after years of robust employment gains, the current slowdown is expected. Even with more slowing to come, we think that more likely than not the labor market won’t reach the critical point that tips the economy into a recession.
