The number of people filing for unemployment benefits for the first time rose by 7,000 in the latest week, as 198,000 Initial Jobless Claims were reported. The number of people continuing to receive unemployment benefits after their initial claim is filed also rose 4,000 to 1.689 million. Note that the number of Continuing Claims can be volatile from week to week. However, the overall trend has been higher, as they have now risen by nearly 350,000 since the low reached last September.

What’s the bottom line? While it’s true that Initial Jobless Claims remain under 200,000, which is a relatively muted level, it’s important to understand that this is a lagging indicator regarding the strength of the labor market. Think of it this way. As the economy slows, companies don’t typically hold layoffs right away. Instead, they usually slow their pace of hiring first, potentially implementing hiring freezes before making the difficult decision to let people go. The elevated level of Continuing Claims suggests companies have reduced their pace of hiring and it’s harder for people who are let go to find new employment.