Jobless claims in the United States dropped slightly last week but stayed elevated, signaling that the labor market is slowing down.
The Labor Department said on Wednesday that initial applications for unemployment benefits fell by 5,000, landing at 245,000 for the week ending June 14. That number was exactly what economists predicted in a Bloomberg survey.
But it’s still close to the highest level in eight months, and continuing claims—representing the number of people still getting benefits—fell by just 6,000, reaching 1.945 million.
That continuing claims number reflects workers who filed weeks ago and still haven’t found jobs. It’s one of the more serious warning signs. The four-week average for new filings jumped to 245,500, the highest level since August 2023, showing that the upward trend has been building for two straight months.
The data tends to move around during school breaks and holidays, but this is clearly more than just noise. It also came during the exact window the government used to collect employment data for June’s nonfarm payroll report, so the stakes were higher.
Fed holds rate steady while housing stalls and layoffs widen
The report came out one day earlier than usual due to the Juneteenth National Independence Day holiday. At the same time, Federal Reserve officials were wrapping up their two-day meeting, with plans to hold interest rates in place at the 4.25% to 4.50% range.
That’s the level it’s been at since December, and there was no sign of a cut. Officials were watching how tariffs from President Donald Trump’s policies are playing out, and monitoring the global fallout from the Israel-Iran conflict. So far, the price hikes from tariffs haven’t pushed up consumer prices much, but the broader impact is still being measured.
Job losses are hitting several sectors at once. In the previous week, layoffs were reported in transportation, warehousing, construction, manufacturing, accommodation, food services, healthcare, agriculture, retail, wholesale trade, admin, arts, entertainment, and professional services.
Minnesota saw a surge as non-teaching school workers filed due to summer break. Claims also rose in Pennsylvania and Oregon. On the other hand, Illinois, California, and Georgia saw declines in new filings before seasonal adjustments.
The hiring side of the economy still looks weak. Nonfarm payrolls added 139,000 jobs in May, compared to 193,000 in the same month last year. Employers are not rushing to expand staff in this kind of economic environment. Data expected next week, covering people who stayed on benefits beyond their first week, will provide more clues about how many recently unemployed workers are finding jobs.
The labor market is just one piece of the slowdown. The Census Bureau reported that building permits for future single-family home construction fell 2.7% in May, down to an annual rate of 898,000 units, the lowest since April 2023. Builders are pulling back as mortgage rates stay high, keeping potential buyers out of the market. That’s caused inventory to pile up to levels last seen in late 2007, which means fewer incentives to break ground on new homes.
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