Initial jobless claims continued to be well-behaved last week. Per this morning’s report, they declined -9.000 to 215,000, while the four week moving average declined -2,500 to 220,750. With the typical one week delay, continuing claims increased 41,000 to 1.885 million - which, despite the big weekly increase, is right in line with their typical range over the past half a year:

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On the more important YoY% basis for forecasting purposes, initial claims were up 1.9%, the four week average up 2.7%, and continuing claims up 5.3%:

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All of these are consistent with a slowly expanding economy.

Taking our first look at their implication for next month’s jobs report, on a YoY% basis unemployment should have increased about 5% to ~4.2% (i.e., 3.8%*1.05=4.2%), which would be unchanged from the March report:

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But if jobless claims are behaving well, manufacturing in the Philadelphia Fed region, including its new orders component, fell off a cliff. The headline number was a poor -26.4, while new orders declined to -34.2(!). Below I show the Philadelphia Fed’s new orders component (blue) in comparison with that of the NY Fed’s index (gray):

Their average is equivalent to what we saw in 2016, and at their nadirs of 2023 and 2024, and not as low as during the Covid lockdowns. While none of the equivalent readings in the past ten years equated with recessions, nevertheless this strongly suggests that the surge from front-running tariffs has ended and, depending on what we see from the three other regions that will report later this month, may auger the beginning of a downturn.

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