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Slowdown Signs Mount as Jobless Claims Hit 10-Week High, Philly Fed Index Plunges

Economic Indicators May 19, 2022 08:37AM ET
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© Reuters.

By Geoffrey Smith

Investing.com -- There were fresh signs that the U.S. economy is starting to cool down on Thursday, as lay-offs hit a 10-week high and a closely watched survey of manufacturing activity took a sharp turn for the worse.

Initial jobless claims rose to 218,000 from a downwardly revised 197,000 last week - ahead of forecasts and the highest weekly number since early March.  

Even so, the numbers are around the level last seen at the 2019 peak of the mini-boom created by then-President Donald Trump's tax cuts. Continuing claims, meanwhile, are still at their lowest level in over 50 years, falling again last week to 1.317 million. The previous week's numbers were also revised down.

The low number of continuing claims are consistent with other figures showing a historically high ratio of vacancies to unemployed, suggesting that the labor market is still red hot despite the start of Federal Reserve attempts to cool it with interest rate hikes.

The real economy is, however, showing clearer signs of slowing down, with department store chain Kohl's (NYSE:KSS) and the specialty apparel retailer Children’s Place (NASDAQ:PLCE) both reporting a sharp weakening in sales from March onwards on Thursday.

In manufacturing, meanwhile, the main index of the Philadelphia Federal Reserve's monthly survey fell to 2.6, its lowest since June 2020 and a much sharper drop than expected from last month's 17.6. Economists had expected a gentle decline to 16.0. The sub-indices for capital expenditures and employment both fell markedly, while one positive element was that the sub-index for prices paid also came off its record high. New orders also held up at high levels. 

While below expectations, the data hit a market that is already well advanced in the process of pricing in a sharp economic slowdown in the latter half of this year. Stock futures pared their losses to trade down less than 1% by 9:15 AM ET, having been down by considerably more before the release.

(CORRECTION: an earlier version of this story misstated the development of the new orders sub-index)

Slowdown Signs Mount as Jobless Claims Hit 10-Week High, Philly Fed Index Plunges
 

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Comments (14)
Ricardo Diogo
Rcd72 May 19, 2022 1:44PM ET
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thank FED ridiculous monetary policy for the upcoming crisis...
Mark Jannetty
Mark Jannetty May 19, 2022 11:31AM ET
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when they said transitory, they meant money in your pocket
Jimmy Smith
Jimmy Smith May 19, 2022 11:11AM ET
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No doubt, Biden is the best ever. 50 years in office and it just gets better and better.
Edward Kubaczyk
Edward Kubaczyk May 19, 2022 10:41AM ET
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cutting oil production. create Big inflation.
Faux News
Faux News May 19, 2022 10:41AM ET
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U.S. oil production is at an all time high. Don't listen to Tucker, Sean and Laura.
Mark Jannetty
Mark Jannetty May 19, 2022 10:33AM ET
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trying to compare to trump's numbers are a joke. job participation at ALL TIME low
John Brown
John Brown May 19, 2022 10:33AM ET
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So, using your infinite wisdom, what is your economic plan that would be impervious to any outside matters. I'm curious.
Ibrahim Olayemi
Ibrahim Olayemi May 19, 2022 10:24AM ET
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🌟🌟
Dennis Wozny
Dennis Wozny May 19, 2022 9:26AM ET
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We need Trump back
Alberto Vazquez
Alberto Vazquez May 19, 2022 9:21AM ET
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Trump mini boom? You are in denial.
Eric Moon
Eric Moon May 19, 2022 8:57AM ET
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all involved in this demonic scamdemicnomics will be facing treason real soon. the penalty for treason is tribunal.
York Regent
York Regent May 19, 2022 8:57AM ET
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This is no surprise. It was known that, FED was behind the curb and started aggressive rate hikes when the impact of helicopter money was wining off and inflationary pressure contined trajectory owing to supply chain disruption. Northerly infoation associated with southerly growth, not the typical inflation / recession cycle. FED’s action could add to the pain and make it severe. Meanwhile uncle Joe’s administration has no clue to what is happening to the economy,
gab nea
gab nea May 19, 2022 8:57AM ET
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it was trump's 2 trillion dollar tax break to the rich that's causing this bubble burst. not my little stimulus checks that was spent Immediately on food and oil, not stock buybacks.
gab nea
gab nea May 19, 2022 8:57AM ET
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why you like the richest not pay their fare share to run america, why?
gab nea
gab nea May 19, 2022 8:57AM ET
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stop repeating trump, think for yourself my friend.
Casador Del Oso
Casador Del Oso May 19, 2022 8:57AM ET
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Typical gaslighting. Blame trumpf while the sitting president does nothing.
 
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