US jobless claims up this week
U.S. jobless claims were 406,000 on a seasonally adjusted basis, up 34,000 on the week prior and surpassing 400,000 for only the 3rd time this business cycle. While the numbers were large, they are very distorted by seasonal adjustment factors; actual jobless claims fell 70,000 from the week prior.
Nevertheless, the employment outlook for the U.S. remains weak and we should expect to see a negative sign in front of the employment number to be released the first week in August. Average jobless claims are up 71,750 over last year, while continuing claims are up 583,500 over last year.
With the manufacturing sector now of less importance to the economy, the U.S. is much less prone to the massive V-shaped business cycles of 25-30 years ago. Back then, U.S. producers were forced to idle workers as inventories built at the end of the business cycle and they furiously attempted to work off inventories by ramping down production. Moreover, the economy is more global and exports should be a bit of a release valve for the U.S. as the dollar is relatively weak.
So, the long and short is that employment is weak but not by no means dire.