Unadjusted Claims Signal Seasonal Mismatch
Unadjusted initial claims dropped by 1.5% to 208,642, but the decline was smaller than the expected 5%, implying weaker-than-usual seasonal hiring activity. Compared to the same week in 2024, unadjusted initial claims are up by more than 12,000. Insured unemployment on an unadjusted basis also fell by 18,524 to 1.757 million, slightly exceeding seasonal expectations but still reflecting labor market slack in some sectors.
Manufacturing Sector Drives State-Level Increases
Michigan and Nebraska posted notable increases in claims (+3,259 and +1,328 respectively), attributed to layoffs in the manufacturing sector. California also saw an increase of over 1,000 new claims. In contrast, Texas, Massachusetts, and Illinois reported the largest week-over-week declines in initial claims. States with the highest insured unemployment rates included New Jersey (2.2%), California and Washington (2.1%), and Massachusetts (1.9%), indicating sector-specific stress in these regions.
Market Forecast: Labor Market Softening Signals Bearish Tilt
The rise in initial claims and the upward trend in the four-week averages—both for initial and continuing claims—point to a gradual loosening of labor market conditions. While not yet signaling a sharp downturn, the persistence of elevated claims levels supports a bearish short-term outlook for labor-sensitive sectors and may increase expectations for Federal Reserve policy easing later this year. Traders should monitor incoming jobs data closely for confirmation of these trends.
