In recent weeks, the United States has observed a notable increase in applications for unemployment insurance, surpassing market expectations as it reached a level not seen since December. According to the latest government data released on Thursday, the seasonally adjusted number of initial claims soared by 22,000 to a total of 242,000, marking its joint-highest point since December 7.
Analysts surveyed by Bloomberg had predicted a significantly lower figure of 221,000. Notably, the prior week's number has also seen an upward revision, increasing by 1,000 to 220,000. Furthermore, the four-week moving average of initial claims now stands at 224,000, reflecting an increase of 8,500 from the previous week’s average, which itself was also revised upward by 250.
In terms of weekly unadjusted claims, there was a slight reduction of 2,997, bringing the total down to 220,541. Economist Thomas Simons, Chief US Economist at Jefferies, commented on the situation, suggesting that expectations for a higher number of claims this week could be attributed to recent layoffs from the Department of Government Efficiency (DOGE).
Simons pointed out the inherent challenges in confirming these factors definitively: "We had expected a higher number this week due to the DOGE layoffs, but it is difficult to confirm if this was the driving factor. There is a lot of turnover at the beginning of the year, and usually less turnover in the months following." The Department of Government Efficiency has reportedly terminated thousands of federal jobs, an initiative that was established during the administration of President Donald Trump. In another aspect, for the week ending February 15, seasonally adjusted continuing claims totaled 1.86 million, falling short of the Bloomberg consensus, which anticipated 1.87 million.
Continuing claims experienced a decline of 5,000 from the level reported the previous week, which had also undergone a downward revision of 2,000. The four-week moving average for continuing claims now stands at 1.87 million, signifying an increase of 3,000 from the prior week’s downwardly adjusted average, as reported by the Department of Labor (DOL). Simons further elaborated on the trends observed in continuing claims, stating, "Continuing claims have been chopping around a lot, but there is no sign of any inflection.
We do not see evidence that slack is building up in the labor market on a wide scale." This indicates a potentially stable labor market despite the fluctuations in initial claims, suggesting that the overall economic landscape remains resilient in the face of changes..