PYMNTS MonitorEdge May 2024

Initial Unemployment Claims Increase by 8,000 as Labor Market Cools

laid-off worker

The number of initial claims for unemployment insurance increased by 8,000 during the week ended Saturday (June 1), showing that the labor market is returning to pre-pandemic conditions.

The total of 229,000 initial claims filed during the week was up from the previous week’s revised figure of 221,000, the Department of Labor (DOL) said in a Thursday (June 6) press release. The previous week’s figure was revised up by 2,000.

The four-week moving average of 222,250 was 750 lower than the previous week’s revised average of 223,000, which was revised up by 500, according to the release.

The number of initial claims exceeded economists’ expectations by 9,000, Reuters reported Thursday. Economists polled by the media outlet had forecast 220,000 claims.

The increase in claims signaled a continuing move of the labor market back to pre-pandemic conditions, driven by the increases in interest rates the Federal Reserve has implemented since March 2022, according to the report.

Despite the increase in jobless claims, the labor market retains its underlying strength and continues to support the economy, the report said.

The DOL’s report comes a day after ADP said that May saw a “steep decline in manufacturing” and a cooling in hiring in the leisure and hospitality space.

“The labor market is solid, but we’re monitoring notable pockets of weakness tied to both producers and consumers,” Nela Richardson, chief economist at ADP, said Wednesday (June 5) in a press release announcing data from the company’s monthly report on private sector employment.

In comments supplied to the DOL, the state with the second-greatest increase in the number of initial claims filed during the week ended May 25, Michigan, said the change was driven by layoffs in management of companies and enterprises industry.

The state with the biggest increase in initial claims, Tennessee, did not supply comment to the DOL. Tennessee had an increase of 1,880 claims during the week, while Michigan had an increase of 1,557.

The DOL also reported Thursday that the insured unemployment rate was 1.2% for the week ended May 25, unchanged from the previous week’s rate, which was unrevised.

The insured unemployment number for that week was 1,792,000, which was 2,000 higher than the previous week’s revised figure of 1,790,000. The figure for the previous week was revised down by 1,000, per the release.