A Wendy’s restaurant displays a “Now Hiring” sign in Tampa, Florida, June 1, 2021.
Octavio Jones | Reuters
Weekly jobless claims soared as the US trade deficit hit its lowest level for the year in May as China swept through Covid-related lockdowns, according to economic data released Thursday.
Initial filings for unemployment benefits totaled 235,000 for the week ending July 2, an increase of 4,000 from the previous period and just over 230,000 Dow Jones estimate, According to the Ministry of Labour. The total was the highest since January 15 and lifted the four-week moving average to 232,500, the highest level since December 2021.
Continuing claims, which are a week late, also rose 51,000 to 1.375 million, above FactSet’s estimate of 1.337 million.
Also Thursday, hiring firm Challenger, Gray & Christmas reported that planned layoffs rose in June to 32,517, a 57% increase from last month and the highest total since February 2021.
The company noted that the auto sector, which usually swings at this time of year, announced 10,198 cuts, bringing the annual total to 15,578, or a 155% increase over the same period in 2021. Of the 30 industries the company tracks, 10 have Announce more cuts this year than in 2021.
Layoff announcements rose in the second quarter after a very low level of cuts in the first three months of the year. During June, the annual total of 133,211 was down 37% from a year ago, but the second quarter is the highest quarterly total since the first quarter of 2021.
“Employers are beginning to respond to financial pressures and slow demand by cutting costs,” said Andrew Challenger, senior vice president of the company. “While the labor market remains tight, that tightness may begin to subside in the next few months.”
Markets are watching Friday’s Non-Farm Payrolls report, which is expected to show a gain of 250,000. If the Dow Jones estimate proves accurate, it would be the lowest monthly gain since December 2020. Federal Reserve officials are watching job numbers closely as they look to calm the job market and the broader economy, which is experiencing the highest rate of inflation since 1981.
On the trade front, the US imbalance of goods and services declined to $85.5 billion, from $86.7 billion in April, According to government figures. Although it was the lowest for 2022, it was higher than Dow Jones’ estimate of $84.7 billion.
The deficit was still 38.4% higher than a year ago as import demand outpaced US exports to the rest of the world.
As China grapples with an increase in Covid infections, the US trade deficit narrowed by a seasonally adjusted $2.8 billion to $32.2 billion. The deficit with Mexico decreased by 1.6 billion dollars, while the imbalance with Canada increased by 900 million dollars.
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