Unemployment Claims higher than expected

Initial jobless claims were higher than expected, rising 12,000 to 472,000 in the week ending June 12th (this is the week that corresponds with the June employment survey period). The four-week average of claims was little changed, down 500 to 463,500.

BOTTOM LINE

The most troubling signals for the labor market recovery story continue to emanate from the weekly jobless claims report. The four-week average of claims has crept higher since the end of April, whereas if these data were signaling a pickup in employment growth, the claims data should be headed down toward the 400,000 mark. While we believe that growth is on track for a 3%–3½% gain in the second quarter in real terms (and a much stronger increase in manufacturing activity), we are concerned by the elevated readings on claims. Unfortunately, as we head into July, these initial claims data become volatile because of summer plant shutdowns and it will be very hard to extract signal from noise during this month.

Souce RDQ

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