US initial jobless claims rise to highest level since October

Applications for US unemployment benefits unexpectedly rose last week to the highest since October, adding to signs that the job market is cooling. Initial claims increased by 8,000 to 247,000 in the week ended May 31, a period that included Memorial Day. The median forecast in a Bloomberg survey of economists called for 235,000 applications.Weekly claims tend to be volatile and fluctuate even more around holidays. However, recent data and surveys pointed to a slowdown in economic activity and sustained gains in benefit filings in the coming weeks could be a sign that layoffs are on the rise. The four-week moving average of new applications, a metric that helps smooth out volatility, rose to 235,000, also the highest since October.
Continuing claims, a proxy for the number of people receiving benefits, fell slightly to 1.9 million in the previous week, according to Labour Department data released Thursday. They remain elevated compared with last year, a sign that it is taking longer for out-of-work people to find a job.
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US-based employers announced about 93,800 job cuts in May, down from April but still elevated compared with last year’s average, according to a separate report Thursday from outplacement firm Challenger, Gray & Christmas. The largest number of planned staffing reductions was in the services and retail sectors.“Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies’ workforce,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in the report. “Companies are spending less, slowing hiring, and sending layoff notices.”

Multiple large companies, including Microsoft Corp., Walt Disney Co. and Booz Allen Hamilton Holding Corp., have recently said they’re cutting jobs. Before adjusting for seasonal factors, initial claims fell last week. Michigan and Florida saw the largest declines.

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Economists anticipate the government’s May employment report, due Friday, will show a stepdown in payroll growth after a solid April pace. They see the unemployment rate unchanged at 4.2%.

Separate data Thursday showed that the US trade deficit narrowed in April by the most on record on the largest-ever plunge in imports, illustrating an abrupt end to the massive front-loading of goods by some companies ahead of higher tariffs.