Higher-Than-Expected Increase In Unemployment Claims Raises Alarm For Job Market

The most recent report from the Department of Labor revealed a larger-than-anticipated uptick in unemployment claims for the preceding week, from 233,000 to 261,000, raising concerns amid the mixed jobs market report from last week.

This marks the third consecutive week of rising initial jobless claims, indicating a potential weakening in the strength of the labor market.

Last Friday, the Bureau of Labor Statistics unveiled that nonfarm payrolls in May soared by 339,000, well surpassing the expected figure of 190,000. However, the unemployment rate also saw a rise from 3.4% to 3.7%, exceeding the projected rate of 3.5%.

Key Takeways From Last Week’s US Unemployment Claims

Initial jobless claims came in at 261,000 for the week ended June 3, up from a revised higher level of 233,000 the prior week and well above expectations of 235,000.
The four-week moving average for jobless claims, which eliminates week-to-week variability, rose from 229,750 to 237,250.
Continuing jobless claims for the week ended May 27 slightly ticked down from 1,794,000 to 1,757,000, below than the forecasted 1,800,000.
Notable increases in jobless claims were reported in California, up 48,750, and in Texas, up 19,947.

Initial Market Reactions

Market-implied probabilities on a Fed interest rate hike in June slightly fell to 30%.
The U.S. Dollar Index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, fell 0.2% for the day.
Futures on the S&P 500 index, which is tracked by the SPDR S&P 500 ETF Trust SPY, ticked slightly up 0.1% ahead of the opening bell.
Gold, which is tracked by SPDR Gold Trust (ARCA: GLD), soared 0.5%.

Chart: Gold Prices Rallied After Initial Jobless Claims Report