Jobless claims rise more than expected

Key Concepts:

• Nonfarm Productivity: A measure of economic output per labor hour.
• Unit Labor Costs: The cost of labor required to produce one unit of output.
• Initial Jobless Claims: A measure of the number of people filing for unemployment benefits for the first time.
• Continuing Claims: A measure of the number of people receiving unemployment benefits for more than one week.
• Trade Deficit: The amount by which a country's imports exceed its exports.
• Basis Points: One hundredth of one percent, used to measure changes in interest rates and other financial percentages.
• Workweek: The average number of hours worked per week.

Nonfarm Productivity

• Second quarter nonfarm productivity jumps to 3.3%.
• Expectations were well under 3%.
• Previous reading was 2.4%.
• 3.3% is the best since the last quarter of 2023.
• This is considered very good news.

Unit Labor Costs

• Unit labor costs moderate to 1%.
• Previous reading was 1.6%.
• Expected 1.6%.
• 1% is the smallest since negative -1.5% in the third quarter of 2024.

Initial Jobless Claims

• Initial jobless claims are 237,000.
• Up 8,000 from a non-revised 229,000.
• 237,000 equals the second to last week in June.
• To find a higher number, you have to go to mid-June at 246,000.
• We have not been above 250,000 since October of last year.

Continuing Claims

• Continuing claims are a bit lower at 1,940,000.
• Still a string of 1.9 million last month.
• Slightly revised.
• These numbers all comp back basically to 2021.
• Looking at November.

Trade Deficit

• Trade deficit comes in at -78 billion.
• Roughly as expected.
• Previous reading was -59 billion.
• The trade deficit has been affected by issues with tariffs.

Market Reaction

• Prior to the data release, the ten-year Treasury yield was around 4.18%.
• After the data release, the ten-year Treasury yield is at 4.19%.
• That's down three basis points.

Analysis and Perspective

• Initial claims still remain well-behaved, even though they've crept up a little bit.
• Above 250,000 would strike some greater scrutiny.
• Productivity is a win no matter how you look at it.
• Nela Richardson (previous guest regarding ADP) brought up an important point regarding the workweek.
• She's looking at a kicking down. That's important.
• Government side of the equation started out the year at 34.1 weeks.
• We have not done anything below that.
• It is actually expanded a bit.
• From the government standpoint, I don't see workweek deterioration, which would be a key area to pay attention to.

Conclusion

The economic data released shows a mixed picture. Nonfarm productivity is strong, and unit labor costs are moderating, which are positive signs. Initial jobless claims have increased slightly but remain at relatively low levels. The trade deficit is roughly as expected. The speaker emphasizes that productivity is a clear win and that while the workweek is an important factor to watch, government data does not currently show deterioration.