The payment: The number of people filing for unemployment benefits in the US in early June rose to a 261,000, the highest in almost two years, but the biggest increases have come in just two states: Ohio and California.
The number of new jobless claims rose by 28,000 in the seven days ended June 3 compared to the previous week, the Labor Department said on Thursday. The figures are seasonally adjusted.
Layoffs picked up earlier in the year, taking jobless claims above 200,000, but up to this week jobless claims are little changed since the spring and suggested layoffs were staying low.
Important details: Of the 53 US states and territories that report jobless claims, 27 saw increases last week. The other 26 saw a decline.
The largest increases occurred in California and Ohio.
Actual or unresolved claims in Ohio rose 6,345 to 16,717 — an unusually large increase.
And in California, the state with by far the highest number of jobless claims, they rose 5,173 to 48,750. This could be due to technology-related layoffs.
But many states, including California, have suffered a spate of fraudulent claims since the pandemic. For example, massive fraud in Massachusetts skewed the statewide total of jobless claims from March through May.
Seasonally adjusted jobless claims in the US last week were well below 219,391. That was an increase from 208,856 in the previous week.
The Memorial Day holiday may also have influenced new submissions. Some people delay or expedite their application requests around a holiday.
Meanwhile, the number of people receiving unemployment benefits in the US has fallen by 37,000 to 1.76 million.
The gradual increase in these so-called permanent claims over the past year suggests that it is taking longer for people who have lost their jobs to find another one.
Big picture: Unemployment claims typically start rising when the economy is deteriorating and a recession is imminent. The recent rise could be a red flag, but it will take a string of higher readings to back the fall.
Still, the surge in Federal Reserve demands could provide another reason to “skip” another hike in US interest rates when senior officials meet next week.
Wall Street widely believes the Fed is sticking by its position to give it more time to assess the economy and how quickly inflation is slowing after a series of rate hikes over the past year. The Fed is hoping for a further slowdown in the labor market and a reduction in upward pressure on wages.
Looking ahead: “The latest reading reflects a shortened holiday week, which should raise suspicions that the big move was noise rather than signal,” said Santander Capital Markets chief economist Stephen Stanley. “I look forward to next week’s reading before I jump to any conclusions.”
Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX are likely to open slightly lower in Thursday trading.