U.S. Unemployment Claims Surge to Two-Year High, Primarily in Ohio and California

June 08, 2023

The first week of June saw an unexpected rise in U.S. unemployment benefit applications to a nearly two-year high of 261,000. The majority of the increase occurred in Ohio and California. In the week ending June 3, new jobless claims grew by 28,000 compared to the previous week, according to seasonally adjusted figures from the Labor Department.

Layoffs increased at the start of the year, pushing unemployment claims above 200,000. Yet, these claims had remained relatively stable since the spring, suggesting that layoffs were not increasing significantly.

About half of the U.S.'s 53 states and territories recorded an increase in jobless claims, with significant surges in Ohio and California. Ohio saw an unusually large increase of 6,345 claims to 16,717, while California's numbers rose by 5,173 to 48,750 - the highest number of jobless claims among all states. This could be attributed to layoffs in the tech industry.

However, some states, including California, have been affected by a high number of fraudulent claims since the pandemic, which has distorted the overall picture.

Taking into account the Memorial Day holiday, which may have affected the timing of new filings, and excluding seasonal adjustments, new U.S. jobless claims were 219,391 last week, an increase from 208,856 in the previous week.

Meanwhile, the number of people receiving unemployment benefits in the U.S. dropped by 37,000 to 1.76 million. However, the gradual rise in continuous claims over the past year indicates that job seekers are taking longer to find new roles.

While an increase in unemployment claims can signal a deteriorating economy and an impending recession, it's too early to confirm this from a single week's data. This development, though, might prompt the Federal Reserve to hold off on another U.S. interest rate hike when officials convene next week, as they assess the economic situation and the speed at which inflation is slowing following a year of rate increases.