Initial jobless claims have reached their highest level since late August 2023, a possible sign that an otherwise robust labor market is changing.
Jobless claims totaled 231,000 in the week ended May 4, seasonally adjusted, up 22,000 from the previous period and higher than the Dow Jones estimate of 214,000, the Labor Department reported Thursday. It was the highest number of claims since August 26, 2023.
The increase in claims is the result of a series of largely positive hiring reports, although hiring in April was low compared to expectations. Additionally, job openings have declined as the job market is expected to slow over the course of the year.
The report also showed ongoing claims, which are a week in arrears, rose to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly number volatility, 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 will begin to seriously deteriorate, and the scale of new layoffs this week looks worrying,” wrote Christopher Rupkey, chief economist at FWDBONDS. “One week doesn’t make a trend, but we can no longer be sure that calm seas lie ahead for the U.S. economy if today’s weekly jobless claims are any indication.”
Nonfarm payrolls rose by 175,000 in April, below the Wall Street estimate of 240,000 and the smallest increase since October 2023. However, the unemployment rate was 3.9% and has remained below 4% since February 2022 .
Markets had little reaction to the release of jobless claims, with stock market futures slightly negative and Treasury yields mixed.
Excluding seasonal adjustment, claims totaled 209,324, an increase of 10.4% compared to the previous week. New York alone saw an increase of more than 10,000, accounting for more than half of the total increase.
“A small number of applications had become almost monotonous, and while this surprise increase may well be an outlier, we should expect more volatility and a trend toward higher applications as the labor market normalizes,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Federal Reserve officials are closely watching labor market numbers as they continue their efforts to bring inflation back to 2%. After their meeting, policymakers noted that “employment gains remain strong.” However, these comments came before the April employment report was released.
Markets expect the central bank to start cutting interest rates in September.
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2024-05-09 14:53:26
www.cnbc.com
