a Clear Sign that Layoffs are Happening at a Growing Number of Companies

Initial claims for unemployment insurance rose by 6,000 to 260,000 in the week ending July 30 from a downward revised 254,000 in the week ending July 23. The four-week moving average of initial claims, which smooths out some of the volatility, moved up 6,000 to 255,000 in the week ending July 30. It hit a low of 172K in early April. The insured unemployment rate held steady at a very low 1.0 percent in the week ending July 23.                                                                            

The total number of people receiving benefits under regular state unemployment insurance programs (continuing claims) jumped by 48,000 to 1.3416 million in the week ending July 23, nearly triple the previous week’s decline of 16,000. The four-week moving average of continuing claims rose by 11,000 to 1.375 million. Continuing claims have moved higher in the past ten weeks but are still close to decades-long lows as unemployed workers leave the program’s rolls, either because their benefits have expired or because they have quickly found a new job. 

The labor market remains in good shape as the summer quarter progresses but the rise in initial claims since early April is a cold breeze blowing at the hot labor market this summer. The recent rise in initial claims to 255K in the four weeks ending July 30 (from a low of 172K in early-April), and the rise in continuing claims to 1.375 million in the four weeks ending July 23 (from a low of 1.314 million in early June) are a clear sign that layoffs are happening at a growing number of companies and the unemployment rate is close to a low at 3.6 percent. 

Based partly on the persistent rise in U claims over the past four months, PNC expects the July employment report (released on August 5) will show payroll job growth of 200K-250K, the smallest rise since April 2021. Payroll job gains in August and September are likely to be even lower than in July. The July unemployment rate will hold at 3.6 percent for the fifth straight month but should edge higher through year-end 2022.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.