Initial jobless claims in the US surged by 22,000 from the previous week to 242,000 in the third week of February, marking the highest level in over two months and significantly exceeding market expectations that claims would remain stable at 221,000.
US jobless claims soar to two-month high
The sharp rise suggested some softening in the labor market, potentially reflecting seasonal fluctuations, layoff trends in certain industries, or broader economic headwinds.
Despite the increase in initial claims, continuing jobless claims—representing those still receiving benefits after an initial week of aid—declined by 5,000 to 1,862,000 in the second week of February, coming in below market expectations of 1,870,000. This decline indicated that while more individuals filed for unemployment initially, some were able to find new jobs or exit the system more quickly than anticipated.
No more tight labor market
The unexpected jump in new claims marked a departure from the previously tight labor market, which had shown resilience despite high interest rates and economic uncertainty. Industries such as technology, finance, and retail have seen sporadic layoff announcements in recent weeks, which may have contributed to the rise. Meanwhile, wage growth and job openings remain key indicators to watch for signs of a broader labor market slowdown.
Notably, federal government employees dismissed by the newly established Department of Government Efficiency (DOGE) were not included in the state claims data, as their filings fall under the Unemployment Compensation for Federal Employees (UCFE) program. In this period, UCFE recorded 614 initial claims, reflecting a relatively small but notable portion of those affected by government restructuring efforts.
Unemployed people find opportunities quickly
Overall, while the rise in initial claims could signal some cooling in the labor market, the lower-than-expected continuing claims suggest that unemployed workers are still finding opportunities relatively quickly. Future reports will be crucial in determining whether this increase is a temporary fluctuation or the start of a more sustained labor market slowdown.
