High Jobless Claims Indicate Weakening Labor Market, Raising Recession Concerns

Today's jobless claims report showed a surprisingly high number of initial claims, with the advance figure for seasonally adjusted initial claims at 228,000, a decrease of 18,000 from the previous week's revised level of 246,000.

The previous week's jobless claims number was revised up by 48,000 from 198,000. Another ominous sign about the health of the labor market. The 4-week moving average stood at 237,750, down 4,250 from the previous week's revised average of 242,000.

The advance seasonally adjusted insured unemployment rate remained at 1.3% for the week ending March 25, though the previous week's rate was revised up from 1.2% to 1.3%.

The advance number for seasonally adjusted insured unemployment reached 1,823,000, the highest level since December 11, 2021, and an increase of 6,000 from the previous week's revised level. The 4-week moving average for insured unemployment also increased, reaching 1,804,000 – the highest since November 13, 2021.

These figures, coupled with weaker JOLTS data and lower ADP payroll data, indicate that the labor market may be starting to loosen. Additionally, the ISM manufacturing and services data from this week also show signs of a weakening economy.

This confluence of factors makes the idea of a soft landing for the economy increasingly implausible, with a recession as soon as the second half of this year becoming more likely. We will be continuing to monitor the labor market and broader economy closely for further signs of slowing.