By Charles Ayitey and Jarrell Dillard, Bloomberg News (TNS)
Initial applications for U.S. unemployment benefits jumped to the highest level in nine months, led by a large increase in California, during a period where holidays and the end of school year can cause fluctuations in claims.
Initial claims increased by 13,000 to 242,000 in the week ended June 8, according to Labor Department data released Thursday. The figure was above all forecasts in a Bloomberg survey of economists.
The U.S. unemployment rate rose to 4% last month—reaching that level for the first time in more than two years and mostly reflecting people returning to the workforce and not finding a job. Layoffs, however, have remained subdued.
New claims before adjustment for seasonal influences rose by 38,530 to 234,707 last week. Besides California, Pennsylvania and Minnesota saw sizable gains for a second week. The release noted that for the prior week ended June 1, Pennsylvania saw layoffs in transportation and manufacturing, while there were job cuts in education in Minnesota.
Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets LLC, said in a note some of the increases in states are “implausibly large” and could be related to the end of the school year or general seasonal volatility.
“I view this more as noise than signal, and I am not going to worry for at least another couple of weeks about the possibility that layoffs are actually ramping up,” Stanley said in a note.
The four-week moving average, which helps smooth short-term fluctuations, increased to 227,000, the highest since September.
California’s new law that mandates a $20 minimum wage for fast-food workers took effect in April, which Bloomberg Economics estimates could cost the state tens of thousands of jobs.
Federal Reserve Chair Jerome Powell on Wednesday said the labor market remains strong, but is gradually cooling with supply and demand coming into better balance.
Continuing claims, a proxy for the number of people receiving unemployment benefits, rose to 1.82 million in the week ended June 1, which included Memorial Day. Weekly data can fluctuate around holidays.
In the 20 years that preceded the COVID-19 pandemic, weekly initial applications averaged about 345,000, and continuing claims roughly 2.9 million.
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©2024 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency LLC.
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