Jobless Claims Jump to 261,000, Highest Since 2021

The number of people filing new claims for unemployment benefits unexpectedly surged last week.

The Labor Department said Thursday that initial claims rose last week by 28,000 to 261,000, the highest number of claims since October 2021. The prior week’s level was revised up by 1,000 to 233,000.

Economists had been looking for claims to edge up to 235,000.

Weekly jobless claims are some of the most current economic data available but they can be volatile. Many analysts look to the four-week moving average of claims as a more reliable guide to the health of the labor market. This rose to 237,250, an increase of 7,500 from the previous week’s revised average.

Continuing claims for unemployment benefits provide a key indicator of labor market strength. When continuing claims are high or rising, this indicates that workers are having a harder time finding new work. When continuing claims are low or falling, laid-off workers are finding jobs quickly.

These are reported with a one-week delay. For the week that ended on May 27, continuing claims fell by 37,000 to 1,757,000. The 4-week moving average was 1,784,750, a decrease of 12,500 from the previous week’s revised average.

The rise in claims is unlikely to make much of a difference in the Federal Reserve’s decision on rates next week. The central bank is widely expected to leave its rate target unchanged, although a minority of analysts say the Fed could hike by a quarter of a percentage point.