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.
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.
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.