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Initial jobless claims rise amid labor market slowdown

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Initial jobless claims ticked up last week, continuing their gradual rise since April as layoffs began to increase.

New claims for jobless benefits rose by 2.4% to 260,000 for the week ending July 30 after a brief decline in the prior week, according to government data released on Thursday.

Initial jobless claims

The four-week moving average reaffirmed our forecast of a slow but steady climb in the coming months, mostly because of strong labor demand that has kept a lid on layoffs. Last week’s layoffs rose by 6,000 to 254,750, marking the 17th straight week of increases.

Recipients of unemployment benefit have not been unemployed for too long; continuing claims rose by only 48,000 to 1.4 million for the week ending July 30.

The gradual increase in new claims will not be a cause for concern until they hit 350,000, which is equivalent to around a 1 percentage-point increase in the unemployment rate, which stands at 3.6% ahead of Friday’s release of July jobs data.

Continuing claims

At this rate of increase in jobless claims, that won’t happen until early 2023, in line with our expectation for a recession to take place at the same time.

The main risk to such an outlook is whether the economy descends into a recession between now and then, which would lead to a spike in claims, not a gradual rise.

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About Tuan Nguyen

@tuannguyen0709

Tuan Nguyen is an economist at RSM US LLP who analyzes high-frequency economic data within the United States and global economies to better understand the American middle market. Tuan’s data-driven economic analysis and insights enhance the ability of middle market companies to thrive in an increasingly competitive global economy. In December 2023, Nguyen and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Based in New York, Tuan works closely with the firm’s cutting-edge Industry Eminence Program to help senior analysts accelerate data-driven strategies in their line of business. His areas of focus include the comprehensive measurement framework for environmental, social and governance (ESG) financial reporting, as well as trends in behavioral, labor and network economics and in industrial organizations. Before joining RSM, he was a graduate researcher, lecturer and teaching assistant for the economics department of his alma mater, Northeastern University, where he taught macroeconomics, international economics and microeconomic theory.

Nguyen holds a Ph.D. in econometrics and quantitative economics from Northeastern University and holds a bachelor of arts in economics and international affairs from the University of New Hampshire, where he graduated summa cum laude and was recognized as an outstanding economics student.

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