Jobless claims jump to 4-month high, but don't be fooled: Layoffs aren't on the rise

By Jeffry Bartash

Timing of Memorial Day holiday an X-factor

Long layoff lines appear to be a thing of the past.

The number of people who applied for unemployment benefits at the end of May jumped to a four-month high, but not because businesses are laying off more workers. The timing of the Memorial Day holiday was an X-factor.

So-called initial jobless claims shot up by 13,000 to 225,000 in the seven days ended May 30, based on seasonally adjusted government data. It was the highest level of new claims since early February.

The sizable increase, however, was affected by the timing of an early Memorial Day holiday. Holidays often skew the seasonal adjustments. They can also affect when laid-off workers actually apply for benefits.

The raw or actual number of new jobless claims, on the other hand, fell slightly to 187,978.

What's more, unadjusted claims have been below 190,000 for three straight weeks, which was very uncommon before the pandemic. Anything under 200,000 is remarkably low.

By all measures, layoffs are indeed extremely low. A separate government report earlier this week showed the rate of layoffs has dipped in April to 1.1%, just a few ticks above an all-time low of 0.9% in the middle of 2024.

Flush with profits and buoyed by steadily rising sales, businesses have little need to cut jobs, especially when the supply of skilled labor is so low.

Key details: The number of people collecting unemployment checks from the government, known as continuing claims, dipped to 1.78 million.

These claims have gradually subsided since hitting a postpandemic peak of nearly 2 million one year ago.

Some of the decline stems from people exhausting their benefits, but companies are hiring more workers and jobs have become a bit easier to find.

Big picture: Low layoffs and low unemployment have become big buffers for the economy despite the shocks of higher oil prices and rising inflation. Americans are still spending at sufficient levels to extend a six-year-old economic expansion.

Looking ahead: "The security of that steady paycheck gives consumers the confidence to keep spending," said Chip West, retail strategist at business-advisory firm RR Donnelley.

Market reaction: The Dow Jones Industrial Average DJIA was set to rise, and S&P 500 SPX decline, in Thursday trading.

-Jeffry Bartash

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06-04-26 0910ET