US weekly jobless claims increase more than expected; labor market remains stable

• Initial jobless claims reached 225,000, above the 213,000 forecast, while the four-week moving average increased 6,500 to 214,750
• Technology sector announced 97,006 job cuts in May (39% of total planned cuts), up 16% from April, though overall planned cuts rose only 3% year-over-year
• Continued unemployment claims fell 8,000 to 1.777 million, and May nonfarm payrolls are forecast to increase by 85,000 jobs with unemployment holding steady at 4.3%

Summary

Key Data Points:

U.S. weekly jobless claims rose 13,000 to 225,000 for the week ended May 30, exceeding economist expectations of 213,000. The four-week moving average increased modestly by 6,500 to 214,750. Continuing claims fell 8,000 to 1.777 million for the week ended May 23.

Labor Market Conditions:

Despite the uptick, the labor market remains stable with claims confined to a 190,000-230,000 range throughout the year. The Federal Reserve's Beige Book characterized May employment as showing "little to no change," describing a "low-hire, low-fire environment" focused on critical roles and attrition replacement.

Sector Developments:

Technology companies announced significant layoffs related to AI adoption. U.S. employers announced 97,006 job cuts in May—up 16% from April—with 39% concentrated in tech. However, planned job cuts rose only 3% year-over-year, indicating layoffs remain relatively contained.

Market Implications:

Low layoff rates continue anchoring labor market stability. The claims data doesn't affect Friday's May employment report, which economists forecast will show 85,000 nonfarm payroll additions (down from 115,000 in April) and an unchanged 4.3% unemployment rate.

External Factors:

The Middle East conflict, now in its fourth month, has disrupted commodity supplies and increased prices for energy, aluminum, and fertilizers, though labor market impacts haven't materialized yet. April JOLTS data showed decreased hiring but fewer layoffs, suggesting recent unemployment increases stemmed from reduced separations rather than weak hiring.

Bottom Line:

Despite higher-than-expected claims, underlying trends point to continued labor market resilience with low firing activity offsetting selective hiring practices.