Third Consecutive Week Of Higher-Than-Expected Unemployment Claims: Is US Job Market Losing Steam?

The long-standing resiliency and tightness of the U.S. job market is starting to show the first signs of cooling.

The most recent Department of Labor data reported a slightly higher-than-anticipated increase in initial unemployment claims for the previous week, which remained stable from a revised higher 264,000, surpassing the projected 260,000.

This marks the third consecutive week of higher-than-expected unemployment claims, signaling some deterioration in labor market strength. Such a tendency would be consistent with the latest Fed remarks, which said that a period of below-trend growth and softer labor market conditions is required to return inflation to the 2% target.

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Key Takeways From Last Week's US Unemployment Claims

• Initial jobless claims came in at 264,000 for the week ended June 17, unchanged from a revised higher level of 264,000 the prior week and slightly above expectations of 260,000.
• The four-week moving average for jobless claims, which eliminates week-to-week variability, rose from a revised higher level of 247,250 to 255,750, above the expected 242,000. 
• Continuing jobless claims for the week ended June 10 fell from 1,772,000 to 1,759,000, below than the forecasted 1,782,000.
• Notable increases in jobless claims were reported in California, up 55,386, Texas, up 28,393 and Ohio, up 15,803.

Market Reactions: Dollar Steady, Stocks Trend Down

Following the initial jobless claims release, the U.S. dollar index, tracked by the Invesco DB USD Index Bullish Fund ETF UUP, held steady for the day. Futures contracts on the S&P 500 index were 0.2% lower at 08:42 EDT, recovering some ground in the premarket.

Treasury yields remained unchanged, with the 2-year yield at 4.74% and the 10-year yield at 3.74%. Traders currently assign a 72% chance of a Fed 25-basis-point rate hike in July.

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