Numbers: The number of people filing for US unemployment benefits in early June jumped to a two-year high of 261,000, but most of the increase occurred in just two states: Ohio and California.
The Labor Department said Thursday that new jobless claims in the seven days ending June 3 rose by 28,000 from the previous week. Numbers are adjusted seasonally.
Layoffs rose early in the year and pushed jobless claims above 200,000, but as of this week, jobless claims had barely changed since the spring and indicated that layoffs remained subdued.
Key details: Of the 53 US states and territories that reported jobless claims, 27 showed an increase last week. The other 26 registered lows.
Most of the increase was in California and Ohio.
Actual or unadjusted claims rose by 6,345 in Ohio to 16,717 — an unusually large gain.
They rose by 5,173 to 48,750 in California, the state with the highest number of jobless claims. This could reflect technology-related layoffs.
However, plenty of states, including California, have suffered an avalanche of fraudulent claims since the pandemic. Massive fraud in Massachusetts, for example, skewed the total national unemployment claims from March to May.
Before seasonal adjustments, new US jobless claims were much lower than last week’s 219,391. That was up from 208,856 the previous week.
The Memorial Day holiday may also have affected new filings. Some people either delay or expedite claims applications around the holiday period.
Meanwhile, the number of people receiving unemployment benefits in the US fell by 37,000 to 1.76 million.
The gradual increase in so-called continuing claims over the past year indicates that people who have lost their jobs are taking longer to find new ones.
The Big Picture: Unemployment claims usually start to rise when the economy is deteriorating and a recession is approaching. The recent increase may be a red flag, but it will take a series of higher readings to cement the case.
However, the surge in claims may give the Federal Reserve more reason to “skip” another hike in US interest rates when it meets top officials next week.
Wall Street widely expects the Fed to stay in place to give it more time to assess the economy and gauge how quickly inflation has slowed after a series of interest rate hikes over the past year. The Fed hopes that the labor market will calm down further and reduce upward pressure on wages.
I look forward: “The latest reading reflects a week of holiday shortening, which should raise suspicions that the big move was more noise than a signal,” said chief economist Stephen Stanley of Santander Capital Markets. “I’m looking forward to seeing next week’s reading before I draw any conclusions.”
Market reaction: Dow Jones Industrial Average
DJIA
and the S&P 500
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It is set to open slightly lower in Thursday’s trading.
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