EmailThe initial claims level fell from 430,000 for the week ending June 4 to 414,000 for the week ending June 11. The Briefing.com consensus expected the initial claims level to fall to 421,000.
Initial claims have remained over the upper bound (410,000) of our "Recovery Zone" for the last ten weeks. 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. That has not happened.
As a result, the initial claims level is pointing not only toward a hesitation in business expansion, but, more importantly, a weakening in overall economic conditions. Unless claims drop precipitously over the next few weeks, 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.
The continuing claims level declined from 3.696 million for the week ending May 28 to 3.675 million for the week ending June 4. The consensus expected the continuing claims level to decline to 3.690 million.
