- Weekly jobless claims rise 28k to 261k
- Current claims decrease by 37,000 to 1.757 million
WASHINGTON, June 8 (Portal) – The number of Americans filing new jobless claims rose last week to its highest level in more than a year and a half, but layoffs are unlikely to pick up as the data marks the Memorial Day cover holiday. which could have resulted in some volatility.
The largest increase in applications in nearly two years, which the Labor Department reported Thursday, was driven by increases in Ohio, Minnesota and California. After rampant fraud in Massachusetts pushed claims briefly to a 1 1/2 year high in May before being revised down, economists warned against reading too much into the latest surge.
“The rise in claims could be a sign of an increase in layoffs, but given the week-to-week volatility in claims, it’s too early to jump to that conclusion,” said Conrad DeQuadros, chief economic adviser at Brean Capital in New York .
“The small increase in claims by state is another factor that suggests we should wait for more confirmations before the number of layoffs picks up, especially given the recent Massachusetts fraud cases.”
Initial jobless claims for the state rose by 28,000 in the week ended June 3 to a seasonally adjusted 261,000, the highest since October 2021. Economists polled by Portal had forecast 235,000 claims for the last week.
Unadjusted claims rose just 10,535 to 219,391 last week, with Ohio claims up 6,345 and California claims up 5,173. In Minnesota, claims rose by 2,746. Job applications in Ohio have surged in recent weeks, which the state blames on layoffs in the manufacturing, auto, and transportation and storage industries. Automakers usually close factories in the summer for conversions.
“Some auto plants take temporary breaks during the summer, although the data changes slightly each year, making it difficult to properly capture seasonal factors,” said Gisela Hoxha, an economist at Citigroup in New York.
“This suggests that there could be additional volatility in initial applications in the coming months.”
The four-week moving average of claims, considered a better gauge of jobs trends as it masks week-to-week volatility, rose 7,500 to 237,250.
Economists saw no impact on monetary policy in the damage data. The Federal Reserve is expected to leave interest rates unchanged next Wednesday for the first time since March 2022, when it launched its fastest rate hike campaign since the 1980s. Since then, the US Federal Reserve has raised interest rates by 500 basis points.
Wall Street stocks traded higher. The dollar fell against a basket of currencies. US Treasury bond prices rose.
Hundreds of people queue to seek help with their unemployment claims more than two hours before its grand opening outside the Kentucky Career Center in Frankfort, Kentucky, the United States, June 18, 2020. Portal/Bryan WoolstonJobless claims
Gradual slowdown
“The number of applications remains well below our estimate of 305,000, which is inconsistent with monthly job growth, and a more sustained increase in application levels is needed to influence Fed monetary policy,” said Matthew Martin, US economist at Oxford Economics New York.
The government reported last week that the economy added 339,000 jobs in May. Although the unemployment rate rose to a seven-month high of 3.7% from 3.4% in April, it is still low by historical standards.
Job growth is being driven by the service sector, including leisure and hospitality, which is still catching up after companies have struggled to find workers over the past two years. Industries like healthcare and education have also seen accelerated retirements during the COVID-19 pandemic.
For some economists, however, the surge in applications suggested that layoffs from the technology sector and interest-rate-sensitive sectors like housing, finance and manufacturing, which grabbed the headlines last year and early this year, were spreading to other segments of the economy.
“However, headline-grabbing announcements of layoffs typically take time to be implemented,” said Stuart Hoffman, chief economic adviser at PNC Financial in Pittsburgh, Pennsylvania. “This delay explains the recent spike in initial claims. This effect could also portend a further escalation in the coming months, along with the ever-widening web of job cuts stretching across all industries.”
The labor market is gradually cooling down.
The Institute for Supply Management (ISM) reported Monday that its services PMI fell in May, mainly due to weakness in employment. According to the ISM, comments from service companies ranged from “we’re trying to do more with the same staff” to “freeze hiring until we better understand where the economy is going.”
Overall, employers appear reluctant to lay off workers after finding workers difficult during the pandemic.
The number of people receiving benefits after an initial week of relief, an indicator of recruitment, fell by 37,000 to 1.757 million in the week ended May 27, the lowest since February, the claims report shows.
The low level of so-called rolling claims suggests that some laid-off workers are still finding work easily, with 1.8 vacancies for every unemployed person in April.
Reporting by Lucia Mutikani; Edited by Chizu Nomiyama and Andrea Ricci
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