Initial Jobless Claims Jump Near 18 Month High

Two days after an unexpectedly weak JOLTS report, and one day ahead of tomorrow's closely watched April payrolls report, when the US is expected to add just 182K jobs, down from 236K, this morning the BLS reported that in the latest week, the number of initial jobless claims jumped from 229K to 242K, rising above the median estimate of 240K, and the third consecutive month of initial claim prints above 200K (the not seasonally adjusted number rose by a slightly lower 219.6K).

Meanwhile, continuing claims dropped modestly from a downward revised 1.843MM to 1.805MM, but remain near the highest since Dec 2021.

The state by state breakdown showed the while most weekly change prints were in line, New York was once again an odd outlier with an outsized drop of 9,358 in claims.

Meanwhile, earlier in the day, the latest Challenger job cuts report found that in April there were 66,995 job cuts, up 176% Y/Y. So far this year, employers have announced plans to cut 337,411, a 322% increase from the 79,982 cuts announced in the first four months of 2022.  With the exclusion of 2020, this is the highest January-April total since 2009, when 711,100 cuts were announced in the first four months of the year.

As shown in the chart below, the divergence between reported initial claims and challenger continues to be... rather big.

Job cuts announced in the East 17,693; Midwest 14,659; West 29,366; South 5,277.

"Retailers and consumer goods manufacturers are preparing for a tightening in consumer spending, particularly with the Fed’s hike to interest rates in an attempt to control inflation,"  Andrew Challenger, firm’s senior vice president, said in statement.

Retail led all industries in April with 14,689 cuts, up 270% from the 3,970 Retail cuts announced in March. So far this year, Retailers have announced 36,115, an 843% increase from the 3,830 Retail cuts announced in the same period last year. Meanwhile, Consumer Products Manufacturers announced the third-highest number of cuts last month with 9,146 for a total of 19,116. This is a 391% increase from the 3,893 cuts announced through April 2022.

“Retailers and Consumer Goods Manufacturers are preparing for a tightening in consumer spending, particularly with the Fed’s hike to interest rates in an attempt to control inflation,” said Andrew Challenger, labor and workplace expert and Senior Vice President of Challenger, Gray & Christmas, Inc.

The Technology sector announced the second-most cuts in April with 11,553, and leads all industries in cuts this year with 113,944, 34% of all cuts announced in 2023. The year-to-date total is up 24,724% from the 459 cuts announced through April 2022. The silver lining:  April marked the lowest number of layoffs in this sector since October 2022, when 9,587 cuts were announced.

Finally, while job cuts fell in April from March, hiring plans have also fallen significantly from 2022. In April, companies announced plans to add 23,310 positions for a total of 93,948 so far this year. This is down 81% from the 486,603 hiring plans announced in the same period last year. It is the lowest number of announced hiring plans through April since 2016, when Challenger tracked 38,455 hiring plans in the first four months of the year.