Unemployment claims hit all-time high since January; Planned layoffs climb; Trade deficit at 2022 low

A Wendy’s restaurant displays a “Now Hiring” sign on June 1, 2021 in Tampa, Florida.

Octavio Jones | Reuters

Weekly unemployment claims rose, while the US trade deficit hit its lowest level of the year in May covidThe related shutdown gripped China, according to economic data released on Thursday.

The initial filing for unemployment benefits for the week ended July 2 totaled 235,000, a gain of 4,000 from the previous period and slightly higher than the Dow Jones estimate of 230,000. according to labor department, The total was the highest level since January 15 and raised the four-week moving average to 232,500, the highest level since December 2021.

Continued claims trailing a week also increased, rising from 51,000 to 1.375 million, which exceeds the 1.337 million FactSet estimate.

Also on Thursday, job placement firm Challenger, Gray & Christmas reported that planned layoffs rose to 32,517 in June, a 57% jump from a month earlier and the highest total since February 2021.

The firm noted that the auto sector, which is normally closed at this time of year, announced 10,198 cuts, bringing the annual total to 15,578, or a 155% increase from the same period in 2021. Of the 30 industries the company follows, 10 have made the cut. Announced more cuts this year than 2021.

The announcements of layoffs in the second quarter have increased after a very low level of cuts in the first three months of the year. Through June, the annual total of 133,211 is down 37% from a year ago, but the second quarter is the highest quarterly since the first quarter of 2021.

“Employers are starting to respond to financial pressure and slowing demand by cutting costs,” said Andrew Challenger, the firm’s senior vice president. “While the labor market is still tight, that tightness could begin to ease over the next few months.”

Markets are looking at Friday’s non-farm payroll report, which is expected to show a profit of 250,000. If the Dow Jones forecast turns out to be correct, it will be the lowest monthly gain since December 2020. Federal Reserve officials are watching the jobs numbers closely as they look to cool the labor market and the broader economy, which is seeing its highest inflation rate since 1981.

On the trade front, the US imbalance for goods and services narrowed to $85.5 billion, from $86.7 billion in April. according to government data, Although it was the lowest level since 2022, it was well above the Dow Jones estimate of $84.7 billion.

The deficit was still up 38.4% from a year ago as demand for imports far outstripped US exports to the rest of the world.

As China grapples with a surge in Covid infections, the US trade deficit with that country fell from a seasonally adjusted $2.8 billion to $32.2 billion. The deficit with Mexico dropped by $1.6 billion while the imbalance with Canada increased by $900 million.