Last week (May 18-24), the number of first-time applicants for unemployment benefits in the United States exceeded expectations, indicating a potential rise in the unemployment rate for the month of May. However, the overall labor market situation remains balanced.
According to the U.S. Department of Labor on Thursday (May 29), the seasonally adjusted number of first-time applicants for unemployment benefits reached 240,000 for the week ending May 24, an increase of 14,000.
Economists surveyed by Reuters had previously anticipated the latest week’s initial claims for unemployment benefits to be 230,000.
Economists noted that the current economic uncertainty brought about by U.S. trade policies has presented challenges for businesses in planning for future developments, leading to an increase in lay-offs. This sentiment aligns with the views expressed in the minutes of the recent Federal Reserve policy meeting.
On Wednesday, the U.S. International Trade Court ruled that President Trump’s invocation of the International Emergency Economic Powers Act to impose comprehensive tariffs on multiple countries exceeded his authority, temporarily halting the implementation of most tariff measures. The Trump administration promptly appealed this decision, further adding to the economic uncertainties.
A report by the Bank of America Institute highlighted a significant increase in the number of high-income families receiving unemployment benefits from February to April compared to the same period last year. Analysis of U.S. bank deposit accounts by the institute also indicated a notable increase in deposits for low and middle-income families in April compared to the same period last year.
Economists predict that the number of applicants for unemployment benefits in June is expected to range between 205,000 and 243,000 this year, primarily due to challenges in adjusting data for seasonal fluctuations. This pattern, consistent with recent years, does not necessarily indicate significant changes in labor market conditions.
The minutes of the Federal Reserve’s policy meeting on May 6-7 were released on Wednesday, wherein policymakers acknowledged the risk of a weakening labor market in the coming months despite considering the overall balance in labor market conditions.
There is a general consensus among economists that the uncertainties facing the economy are higher than before, and the Fed needs to exercise caution in its approach to rate cuts, waiting for a clearer understanding of the impacts of the Trump administration’s tariff policies before taking action.
Since December last year, the Federal Reserve has maintained the federal funds rate in the range of 4.25% to 4.50% due to uncertainties surrounding the impact of trade policy volatility. The minutes indicated that “risks of higher inflation and unemployment rates have increased,” yet officials remain optimistic about the steady growth of the U.S. economy and the fundamental balance in the labor market.
Data shows that for the week ending May 17, the number of people continuing to receive unemployment benefits after their initial claims increased by 26,000, reaching 1.919 million after seasonal adjustments. The increase in the number of continued claims may be attributed to businesses finding it difficult to determine whether to increase their workforce amidst economic uncertainty.
The number of individuals continuing to claim unemployment benefits encompasses the period during which the government conducts surveys to determine the monthly unemployment rate in May. The unemployment rate for April was 4.2%. Many individuals experiencing unemployment are facing long-term challenges, with the median duration of unemployment rising from 9.8 weeks in March to 10.4 weeks in April.
(This article is based on reporting by Reuters)