During the week ending June 3, 2023, workers filed 261,000 seasonally adjusted new unemployment claims, an increase of 28,000 from the previous week’s revised numbers. This is the highest number of new claims since Oct. 30, 2021. Before last week, initial unemployment claims had plateaued last month.
In May, the unemployment rate increased to 3.7% from 3.4% in April, even though the economy added 339,000 jobs. May’s unemployment rate represents a seven-month high. However, despite the increase in the unemployment rate, it remains low compared to historical data.
The surge in initial unemployment claims was driven by claim spikes in Ohio and California. Unadjusted initial claims in Ohio increased by 6,345 and by 5,173 in California. This claims data includes the Memorial Day holiday; there’s typically increased volatility in claims numbers during public holidays.
The four-week moving average of unemployment claims increased by 7,500 to 237,250. The four-week moving average is considered to be an accurate measure of current labor market trends.
Takeaways
Since the rise in new unemployment claims can be attributed to increases in a handful of states, it’s likely too early to draw conclusions regarding the pace of layoffs throughout the United States. While an increase in initial unemployment claims could signal a jump in layoffs, the recent volatility of weekly unemployment claims makes it difficult to draw any definitive conclusions.
Economists had expected layoffs to increase in 2023 in response to increases in interest rates. However, this has not happened as predicted, as demonstrated by the U.S. economy’s surprisingly strong job growth in May. While the labor market continues to be stronger than previously believed, many experts still believe a mild recession may arrive during the second half of 2023 or early 2024. As these workforce trends can impact organizations’ efforts to attract and retain workers, employers should continue to monitor trends closely to stay competitive in today’s changing labor market.