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US weekly jobless claims rise to 260,000 ahead of nonfarm payrolls report


A rental sign is posted on the window of a Chipotle restaurant in New York, April 29, 2022.

Shannon Stapleton | Reuters

The total number of initial unemployment insurance claims was 260,000 last week, near the highest level since November amid a shift in the US labor market.

Totals for the week ended July 30 were in line with Dow Jones estimates but up 6,000 from the previous week’s downward revision, the Labor Department reported on Thursday.

In other economic news, the U.S. goods and services trade deficit shrank to $79.6 billion in June, down $5.3 billion and slightly below estimates of $80 billion. USD.

The jobless claims figure comes a day before the Bureau of Labor Statistics releases its much-anticipated nonfarm payrolls report for July. The US economy is expected to have added 258,000 positions for the month, down from June’s initial estimate of 372,000 and the lowest total since December 2020.

Stuart Hoffman, senior economic adviser at PNC Financial Services, said: “The labor market remains in good shape as the summer quarter gets underway but the increase in initial statements since early April is a cold breeze blows into the hot job market this summer.”

Federal Reserve officials are closely monitoring the job market for clues about an economy experiencing the highest inflation rates in more than 40 years.

Jobless claims have been running around their lowest levels since the late 1960s but started to climb higher in June as inflationary pressures mounted and companies began cutting staff. Even with strong hiring in 2021 and the first half of 2022, total employment is 755,000 people below the level in February 2020, the last month before the Covid pandemic hit.

The four-week moving average of jobless claims, which helped smooth the weekly volatility, reflects a changing job market. That number jumped 6,000 from last week to 254,750, up sharply from the recent low of 170,500 on April 2 and the highest of the year.

The claims continued, running after the number of headlines a week, totaling 1.42 million, up 48,000 from the previous week and 83,000 from the beginning of July.

Record high trade deficit

On the trade front, the lower deficit reflects a shift back to a more normal environment after the US deficit with global trading partners hit a record $107.7 billion in March.

Exports increased by $4.3 billion while imports decreased by $1 billion. However, the goods deficit with China increased by $4.7 billion to $37 billion. Imports of cars, spare parts and engines fell by $2.7 billion while capital goods increased by nearly $1 billion.

Even if the deficit fell in June, it was still 33.4% higher than a year ago as domestic supply failed to keep up with strong demand. That has fueled inflation, which is at its highest level since the early 1980s.

The Federal Reserve has set up a series of four rate hikes this year totaling 2.25 percentage points, part of an effort to limit some demand in that pandemic era. New inflation figures will be released next week, after the consumer price index for June showed a 9.1% gain in 12 months.



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