Initial claims for state unemployment benefits in the US have reached their highest level since October 2021, according to a Labor Department report. For the week ended September 6, initial claims jumped by 27,000 to a seasonally adjusted 263,000. However, the Labor Day holiday may have influenced the data. Also noted was an unexplainable surge of 15,304 in unadjusted applications specifically within Texas.
Economists have suggested that the increase in Texas claims might be linked to the July floods. Some individuals may have incorrectly filed regular claims instead of applying for the state’s Disaster Unemployment Assistance (DUA), which was extended to the end of September. Abiel Reinhart, an economist at JP Morgan, noted the magnitude of the Texas spike resembled a natural disaster, adding that individuals might have mistakenly filed a normal claim.
Despite the potential distortions, there are indications that the labour market is weakening. The number of individuals receiving benefits after their initial week of aid remained unchanged at 1.939 million during the week ending August 30, according to the claims report. Concerns about the strength of the labour market have been mounting in recent weeks.
Earlier this week, the government indicated that nonfarm payrolls may have been overstated by 911,000 jobs in the 12 months leading up to March. This followed last Friday’s release of the monthly employment report, which revealed that job growth had nearly stalled in August. Amid tariff uncertainty, the economy shed jobs in June for the first time in four and a half years.
