WASHINGTON – The number of Americans filing new claims for unemployment benefits rose last week to the highest level in more than eight months, offering more evidence that the labor market was steadily cooling.
The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy’s health, followed news last week that the economy added the fewest jobs in six months in April, while job openings dropped to a three-year low in March.
Ebbing labor market momentum has put two interest rate cuts from the Federal Reserve this year back on the table.
“The labor market shows some signs of rebalancing with fewer job openings posted around the country, and now company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” said Christopher Rupkey, chief economist at FWDBONDS.
Initial claims for state unemployment benefits increased 22,000 to a seasonally adjusted 231,000 for the week ended May 4, the highest level since the end of last August. The increase was the largest in nearly four months.
Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims broke above the 194,000-225,000 range, which had prevailed since the start of the year.
Some of the rise last week was likely related to seasonal issues following the recently ended school spring breaks.
“Given that the varied timing of school spring breaks, and holidays like Easter and Passover, makes the seasonal adjustment process very complicated, we often see volatile readings in the seasonally adjusted data around this time of year,” said Daniel Silver, an economist at JPMorgan.
Unadjusted claims shot up 19,690 to 209,324 last week, with filings in New York surging by 10,248. Pantheon Macroeconomics Chief Economist Ian Shepherdson speculated that the jump could reflect “Citigroup employees laid off in January but paid through April making their first claims.”
There were also sizeable increases in applications in California, Illinois, Indiana and Texas. Only Iowa reported a drop in claims in excess of 1,000.