The customary initial jobless claims report shows a reduction in jobless claims by 14,000 to 374,000 during the week ended June 30, putting the four-week moving average at 385,750. Continuing claims, which lag initial jobless claims by one week, rose 4,000 to 3.306 million. The year commenced with initial jobless claims at 390,000 in the first week of January, the year-to-date low has been 361,000 and the latest reading is 374,000, as noted earlier. These numbers imply that there has been only a small improvement in the initial jobless claims, nothing to write home about.

The June Challenger report on layoffs shows a seasonally adjusted reduction in layoffs during June (43,715 vs. 67,772 in May), which bodes positively for the employment report of June. Payroll employment rose only 73,000, on average, in the April-May period vs. 226,000 in the first three months of the year. The unemployment rate moved up one notch to 8.2% in May. The market consensus is an increase of 90,000 (35K-165K is range of forecast) in payroll employment and an unchanged jobless rate at 8.2% (8.1% -8.3% is range of forecast) during June. Bernanke stressed in the June 20 press conference that the labor market holds the key to whether the Fed will take additional actions to stem the loss of momentum in the economy. Consistent with this message, the June employment report will establish if the Fed will take further steps at the July 31-August 1 FOMC meeting. The minutes of the June FOMC meeting will be released on July 11 and Chairman Bernanke will present the semiannual update to the Senate on July 17.

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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