in Holiday Week Ending July 6.

• Initial claims for unemployment insurance fell by 17,000 in the holiday week ending July 6. 

• Continuing claims for unemployment insurance fell by 4,000 in the week ending June 29.

• The labor market remains strong, but hiring is slowing. 

• The labor market will soften modestly further in the latter half of 2024, with smaller job gains and a slightly higher unemployment rate.

Initial claims for unemployment insurance fell by 17,000 to 222,000 in the holiday week ending July 6. The four-week moving average of initial claims, which smooths out some of the volatility, fell by 5,000 to 233,500 in the week ending July 6.

Initial claims have moved modestly higher in 2024 after starting the year at a historically low 200,000. Over the past couple of years initial claims have risen and fallen, and there was a similar increase in the first half of 2023, which was followed by an unwinding in the second half of last year. The labor market has remained strong in the first half of this year even as initial claims have risen somewhat, with average monthly job gains of 222,000 in the first six months. It could be that initial claims are signaling a slowing in job growth that will show up later this year, or it could be that the seasonal adjustment process has not fully captured the dynamics of the post-pandemic labor market and the increase so far this year is a mirage.

Continuing claims for unemployment insurance fell by 4,000 to 1.852 million in the week ending June 29. The four-week moving average of continuing claims rose by 10,000 to 1.840 million. This is the highest level for the four-week average since December 2021.

The message from continuing claims is clear. They are up from their levels in the second half of 2022 and all of 2023. Although the labor market is historically strong, it is taking somewhat longer for unemployed workers to find jobs. This is consistent with the May Job Openings and Labor Turnover Survey, or JOLTS report. The hiring rate has been between 3.5% and 3.7% in 2024, down from around 4.5% in the second half of 2021. But layoffs remain extremely low on a historical basis.

The labor market is still historically strong, but not quite as strong as it was in 2022 and 2023. Chair Powell recently said that the labor market is nearly back to a balance between slower demand and rising labor supply. Job growth has eased and the unemployment rate is slightly higher than it was in early 2023, when it hit 3.4% for a couple of months. PNC expects a further easing in the labor market through the rest of this year as high interest rates continue to weigh on the economy. PNC is forecasting job growth to slow to around 150,000 per month in the latter half of this year and closer to 100,000 in the first half of 2025, and the unemployment rate will increase somewhat over the next year to about 4.3%.