Initial jobless claims fell 1,000 to 428,000 during the week ended June 25. The four-week moving average has held around 426,000 since the week ended May 26. Essentially, firms have been unwilling to increase their payrolls. Continuing claims, which lag initial claims by one week, fell 12,000 to 3.702 million. The four-week moving average of continuing claims has held almost steady since April 2011 (see Chart 1).

Unemployment benefits under special programs (see Chart 2) show a downward trend. However, it is not clear if the decline of these benefits is due to increased hiring or if recipients have exhausted their benefits. The special benefits data would be more useful if the Department of Labor collected data pertaining to exhaustion of benefits when processing applications for unemployment insurance. The Fed's policy actions are tied to its dual mandate of full-employment and price stability; the latest numbers indicate that the Fed is far from meeting this requirement. The employment numbers for June will be published on July 8. The unemployment rate at 9.1% and the small increase in payrolls (+54,000) in May were largely disappointing. Readings of unemployment claims are not supportive of a turnaround in hiring in June.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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