Bad News. US Jobless Claims Have (Basically) Stopped Falling. But Hope Floats In Philly

Weekly jobless claims in the US refuse to play along with the “V-shaped” recovery narrative parroted by the White House.

Another 1.5 million Americans filed for unemployment benefits last week, down just 58,000 from the previous week. In addition to being far worse than consensus (1.29 million), the number is worse than the most pessimistic estimate from 47 economists surveyed.

Last week’s print was revised higher to 1.566 million from 1.54 million.

The four-week moving average dropped to 1.77 million.

“Today’s jobless claims numbers suggest the reopening story isn’t having as much of a positive impact on the labour market as hoped”, ING said. “It reinforces the case for more fiscal support to keep the economy on the recovery path”.

Continuing claims fell 62,000 to 20.544 million in the week to June 6. From where I’m sitting, that doesn’t seem like a particularly large drop, although the previous week’s print was revised down. Three weeks back, continuing claims rose. When considered together, the past three continuing claims prints seem to cast a bit of doubt on the notion that there’s a “silver lining” in the otherwise dour jobless claims data.

“Continuing claims are also proving to be sticky”, ING went on to write, in their quick take, noting that the latest figures “mean the insured unemployment rate remains at 14.1%, which is higher than the official unemployment rate of 13.3%”.

In any case, the headline for this week will simply be that claims have seemingly stopped falling. After all, 1,508,000 isn’t that much lower than 1,566,000 in the grand scheme of things.

One has to wonder what this means for the June jobs report. Obviously, everyone wants an encore from May’s stunning upside surprise, but these figures undermine the labor market recovery story – superficially at least.

On the bright side, the Philly Fed was a blowout on Thursday.

The headline gauge jumped to 27.5 from -43.1, breezing past estimates for a -21.4 print. The red dot is low point in April. May’s bounce from -56.6 to -43.1 barely shows up, but the subsequent jump reported on Thursday sure does (orange dot).

Notably, “hope” hit a three-decade high in the June survey. “The diffusion index for future general activity increased 17 points from its May reading, reaching its highest level in nearly 30 years”, the accompanying color reads.

Over 75% of firms expect increases in activity over the next six months.

As the survey goes on to note, “the future shipments and new orders indexes also improved [and] firms are optimistic overall about hiring over the next six months [as] the future employment index rose 13 points to 29.6, with over 36% of the firms expecting higher employment”.

Somebody tell that to the 1.5 million Americans who filed for unemployment benefits last week.