Initial claims for unemployment benefits have reached their highest level since late August 2023, a possible sign that the robust labor market is changing.
The Labor Department reported Thursday that unemployment claims totaled a seasonally adjusted 231,000 for the week ending May 4, up 22,000 from the prior period and higher than the Dow Jones estimate of 214,000. This was the highest number of claims since August 26, 2023.
The increase in claims follows a series of mostly strong employment reports, although April hiring was light compared to expectations. Job opportunities also declined amid expectations that the labor market is likely to slow down during the year.
The report also showed that continuing claims, which were delayed by a week, rose to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly fluctuations in numbers, rose to 215,000, up 4,750 from the previous week.
“Weekly jobless claims are one of the most timely indicators of when the economy is starting to seriously deteriorate, and the volume of new layoffs this week looks alarming,” wrote Christopher Roepke, chief economist at FWDBONDS. “One week does not constitute a trend, but we can no longer be certain that calm seas await the US economy if today's weekly jobless claims are any indication.”
Nonfarm payrolls rose by 175,000 in April, below Wall Street estimates of 240,000 and the smallest increase since October 2023. However, the unemployment rate stood at 3.9%, and has continued to remain below 4% since February 2022.
Markets reacted little to the unemployment claims release, with stock market futures slightly negative and Treasury yields mixed.
Excluding seasonal adjustments, claims totaled 209,324, an increase of 10.4% from the previous week. New York alone saw an increase of more than 10,000, accounting for more than half of the total increase.
“The low number of claims has become almost monotonous, and although this spike may be just a bump, we should expect more volatility and a trend toward higher claims as the labor market returns to normal,” said Robert Frick, corporate economist at Navy Federal Credit. . union.
Federal Reserve officials are watching jobs numbers closely as they continue their efforts to bring inflation back to 2%. Following their meeting, policymakers noted that “job gains remained strong.” But these statements came before the release of the April employment report.
Markets expect the central bank to start cutting interest rates in September.
