The number of Americans filing new applications for unemployment benefits rose more than expected last week, reaching a four-month high, though economists said the broader trend continued to point to a resilient United States labour market.
According to data released by the Bureau of Labor Statistics (BLS) on Thursday, initial claims for state unemployment benefits increased by 13,000 to a seasonally adjusted 225,000 in the week ended 30 May.
The result exceeded market expectations for 213,000 claims and marked the highest level since early February.
Despite the increase, economists largely attributed the rise to volatility associated with the Memorial Day holiday period, noting that claims often increase around public holidays.
There was little evidence that the ongoing conflict in the Middle East had yet affected employment conditions, although uncertainty surrounding the economic outlook has grown.
The four-week moving average of claims, which smooths weekly fluctuations, rose by 6,500 to 214,750. While claims have moved toward the upper end of their 190,000 to 230,000 range for 2026, layoffs remain low by historical standards.
Applications for unemployment benefits could remain elevated in coming weeks as the academic year concludes and seasonal employment patterns shift.
Separate data from outplacement firm Challenger, Gray & Christmas showed U.S.-based employers announced 97,006 job cuts in May, up 16% from 83,387 in April.
Artificial intelligence continued to be a major driver of workforce reductions.
The report noted: “In May, Artificial Intelligence (AI) led all reasons for job cuts for the third month in a row, with 38,579 announced cuts. It is the highest monthly total ever recorded for the reason since Challenger began tracking it in 2023, and it accounted for 40% of all cuts announced in May — up from just 7% in January, 25% in March, and 26% in April. For the year, AI has been cited in 87,714 cuts, or 22% of all 2026 layoffs, already far surpassing the 54,836 attributed to the reason in all of 2025.”
The Federal Reserve's Beige Book, released on Wednesday, reinforced the view that labour market conditions remain stable despite slowing hiring activity.
The report said employment showed "little to no change" in May and noted that "most districts described a low-hire, low-fire environment".
It added that "hiring remained selective and primarily focused on critical roles or attrition replacement".
The weekly claims figures do not influence the government's closely watched nonfarm payrolls report, due on Friday (Saturday AEST), because they fall outside the survey period used to compile the data.
Markets expect nonfarm payrolls to increase by 85,000 jobs in May, down from 115,000 in April, while the unemployment rate is forecast to remain unchanged at 4.3%.
ANZ analysts said in a note to clients:
"U.S. May nonfarm payroll data, due Friday, are expected to show hiring rose 85k last month, down from 115k in April but signalling that the labour market is stabilising, albeit at weak levels.
"The unemployment rate is expected to have been stable at 4.3%, held down by this year’s 0.6ppt decline in the participation rate to 61.8%.
"Average hourly earnings are projected to have risen 3.4% y/y, down from 3.6% in April, indicating the labour force is not a significant source of inflation.
"The FOMC will enter its communications blackout on Saturday, so there is little time left for members to comment on the data.
"However, senior members have recently set a clear framework for assessing the current environment: there is no urgency to change interest rates given current energy prices and geopolitical uncertainties, but the effects of higher energy prices should prove transitory with inflation expected to fall back later this year.
"We think the underlying bias among the Board of Governors is to extend the rate cutting cycle once conditions allow."
The labour market data follows the release earlier this week of the Labor Department's Job Openings and Labor Turnover Survey (JOLTS), which showed hiring declined and layoffs fell in April.
A separate report from the BLS also showed worker productivity grew more slowly than initially estimated during the first quarter.
Nonfarm productivity, which measures output per hour worked, increased at an annualised rate of 0.3%, revised down from the previously reported 0.8%.
The result was the slowest pace of growth since the first quarter of 2025 and below economists' expectations for a revised 0.5% increase.
Despite the weaker quarterly reading, productivity growth remained solid on an annual basis and continues to support the broader economy by helping offset wage pressures and inflation.
ANZ analysts noted:
"U.S. labour productivity rose 2.8% y/y in Q1, maintaining the trend rise that has characterised the U.S. economy in the post-pandemic years.
"There are many explanations for this, not least of which is the realignment of many workers to more productive firms following the pandemic lockdown.
"Strong productivity growth is disinflationary, as workers can produce more output per hour worked.
"The gap between productivity growth and real wage growth has been widening at an increasing rate in recent decades and partly explains the strong performance of U.S. equity markets."
