Octavio Jones | Reuters Weekly jobless claims rose while the U.S. trade deficit fell to the lowest level of the year in May as Covid-19 shutdowns hit China, economic data showed on Thursday. Initial claims for jobless benefits totaled 235,000 for the week ended July 2, up 4,000 from the previous period and slightly more than the Dow Jones estimate of 230,000, according to the Labor Department. The total was the highest since Jan. 15 and lifted the four-week moving average to 232,500, its highest level since December 2021. Continuing claims, which are a week late, also rose, rising 51,000 to 1.375 million, higher than the FactSet estimate of 1.337 million. Also Thursday, job placement firm Challenger, Gray & Christmas reported that planned layoffs rose in June to 32,517, a 57 percent jump from a month earlier and the highest total since February 2021. The company noted that the auto sector, which typically lays off this time of year, announced 10,198 layoffs, bringing the annual total to 15,578, or a 155% increase from the same period in 2021. Of the 30 industries the company tracks, 10 have announced more cuts this year than in 2021. Layoff announcements soared in the second quarter after an unusually low level of cuts in the first three months of the year. Through June, the annual total of 133,211 was down 37% from a year ago, but the second quarter is the highest quarterly total since the first quarter of 2021. “Employers are beginning to respond to economic pressures and slowing demand by cutting costs,” said Andrew Challenger, the company’s senior vice president. “While the labor market is still tight, that tightness may begin to ease in the coming months.” Markets are watching Friday’s nonfarm payrolls report, which is expected to show a gain of 250,000. If that Dow Jones estimate turns out to be accurate, it would be the lowest monthly gain since December 2020. Federal Reserve officials are closely watching the jobs numbers as they try to cool the labor market and the broader economy, which is posting the highest inflation rate since 1981. On the trade front, the U.S. imbalance for goods and services narrowed to $85.5 billion, from $86.7 billion in April, according to government data. While that was the lowest of 2022, it was above the Dow Jones estimate of $84.7 billion. The deficit was still widening by 38.4% from a year ago as demand for imports has far outstripped US exports to the rest of the world. As China grappled with a surge in Covid infections, the US trade deficit narrowed by a seasonally adjusted $2.8 billion to $32.2 billion. The deficit with Mexico also decreased by $1.6 billion while the imbalance with Canada increased by $900 million.
