Jobless claims - aka layoffs - rise to 238,000 and stay near one-year high

By Jeffry Bartash

Three states - New York, New Jersey and California - accounted for most of the increase

The numbers: The number of Americans who applied for unemployment benefits last week rose slightly and stayed near a one-year high, largely because of big increases in New York, New Jersey and California.

New claims rose by 4,000 from 234,000 in the prior week, the government said Wednesday. The report was released a day early because of the July 4 holiday.

New jobless claims have surged since the end of the school year, raising questions about whether it's a temporary increase or a sign of rising layoffs.

Economists polled by the Wall Street Journal had forecast new claims to total 233,000 in the seven days ending June 29, based on seasonally adjusted figures.

Key details: New jobless claims rose in 28 of the 53 states and territories that report these figures to the federal government. They fell in 25 others.

Most of the increases were small, except for a few large states such as New York, where unadjusted new claims shot up 39%. They are likely to recede in the next week or two if the usual patterns are in play.

Omitting seasonal adjustments, jobless claims nationwide rose to 238,149 last week from 225,100.

They were still lower compared to the same week in June 2023, however. Actual jobless claims in the same week last year totaled 251,705.

The number of people already collecting unemployment benefits in the U.S., meanwhile, rose by 26,000 to 1.86 million, the government said. That's the highest level since late 2021.

The gradually increasing level of these so-called continuing claims suggests it's taking longer for people who lose jobs to find new ones.

Big picture: It's still too soon to tell if the recent rise in jobless claims from the low 200,000s represents weaker hiring, an increase in layoffs or seasonal changes in employment tied to the beginning of summer.

Economists say it may take a month or two to determine if a new trend is emerging.

What could complicate matters are the annual summer shutdowns of auto plants to retool for new models. Temporary layoffs associated with the shutdown tend to make jobless claims more erratic in midsummer.

Looking ahead: "It could be that initial claims are signaling a slowing in job growth that will show up later this year," said chief economist Gus Faucher of PNC Financial Services, "or it could be that the seasonal adjustment process has not fully captured the dynamics of the post-pandemic labor market and the increase so far this year is a mirage."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose in early Wednesday trading.

-Jeffry Bartash

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07-03-24 0949ET

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