A Wendy’s restaurant displays a “Now Hiring” sign in Tampa, Fla. June 1, 2021.
Octavio Jones | Reuters
Weekly jobless claims rose while the US trade deficit hit its lowest level for the year in May covid-conditional shutdowns swept China, according to economic data released on Thursday.
Initial jobless claims for the week ended July 2 totaled 235,000, up 4,000 from the previous period and slightly above the Dow Jones estimate of 230,000. according to the Department of Labor. The total was the highest since Jan. 1, taking the four-week moving average to 232,500, the highest since December 2021.
Continuing receivables, which were a week behind, also rose, rising 51,000 to 1,375 million, higher than the FactSet estimate of 1,337 million.
Also on Thursday, employment firm Challenger, Gray & Christmas reported that scheduled layoffs rose to 32,517 in June, a 57% increase from a month ago and the highest total since February 2021.
The company noted that the auto sector, which is normally laid off at this time of year, has announced 10,198 cuts, bringing the annual total to 15,578, a 155% increase from the same period in 2021. Of the 30 industries the company follows, 10 have announced more cuts this year than they will in 2021.
Layoff announcements jumped in the second quarter after extremely low cuts in the first three months of the year. Through June, the yearly total of 133,211 is down 37% year over year, but the second quarter is the highest quarterly total since the first quarter of 2021.
“Employers are beginning to respond to financial pressures and declining demand by cutting costs,” said Andrew Challenger, the company’s senior vice president. “While the labor market is still tight, that tightness could ease over the next few months.”
Markets are watching Friday’s nonfarm payrolls report, which is expected to show a gain of 250k. If this Dow Jones estimate proves correct, it will be the lowest monthly gain since December 2020. Federal Reserve officials are watching jobs closely as they try to cool the job market and the broader economy, which is experiencing its highest rate of inflation since 1981.
On the trade front, the US imbalance in goods and services narrowed to $85.5 billion from $86.7 billion in April. according to government information. Despite being the lowest of 2022, it was above the Dow Jones estimate of $84.7 billion.
The deficit was still 38.4% higher year-on-year as demand for imports has far outstripped US exports to the rest of the world.
As China struggled with a surge in Covid infections, the US trade deficit with that country fell to $32.2 billion from a seasonally adjusted $2.8 billion. The deficit with Mexico fell by $1.6 billion, while the imbalance with Canada increased by $900 million.