US jobless benefit applications jump to 236,000 last week as concerns about labor market persist

U.S. jobless claims surged last week, rising by 44,000 to 236,000 from the previous week’s 192,000, the Labor Department reported Thursday. The jump significantly exceeded analysts’ forecasts of 213,000 new applications, though experts note the previous week’s figures were likely distorted by the Thanksgiving holiday.

Despite this spike, unemployment claims remain within the historically healthy range observed in recent years, presenting a complex picture of the U.S. labor market that has prompted concern among economic policymakers.

The Federal Reserve responded Wednesday with its third consecutive interest rate cut, trimming its benchmark lending rate by a quarter-point. Fed Chair Jerome Powell expressed particular concern about labor market weakness that may be more severe than official statistics indicate.

“It’s a labor market that seems to have significant downside risks,” Powell told reporters following the rate decision. “People care about that. That’s their jobs.”

Powell warned that current government data showing modest job growth of approximately 40,000 jobs monthly since April could be revised downward by as much as 60,000. Such a revision would transform the narrative from sluggish growth to actual job losses, with employers potentially shedding an average of 20,000 positions monthly since spring.

This caution aligns with private payroll firm ADP’s recent estimate of 32,000 U.S. job losses in November. The unexpectedly weak report corresponds with government employment data showing a marked decline in job growth since April, when President Trump implemented sweeping tariffs affecting U.S. trading partners.

The labor market has shown inconsistent performance in recent months. While September posted a solid gain of 119,000 jobs, both June and August recorded net job losses. Meanwhile, the unemployment rate has crept up to 4.4%, reaching its highest level in four years.

November’s comprehensive employment data release has been delayed until next week due to the government shutdown, leaving analysts with an incomplete picture of current labor market conditions.

The labor market appears to be in what economists describe as a “low-hire, low-fire” state. While layoffs remain relatively contained, hiring has also slowed considerably, making it increasingly difficult for unemployed individuals to find new positions.

Several major corporations have recently announced significant workforce reductions. UPS, General Motors, Amazon and Verizon have all disclosed plans for job cuts, though the full implementation of these reductions typically takes weeks or months and may not yet be reflected in current jobless claims data.

In a more positive development, the total number of Americans collecting unemployment benefits for the week ending November 29 fell by 99,000 to 1.84 million, reaching the lowest level for continuing claims since mid-April. However, analysts caution that this decline may reflect seasonal adjustments and the 26-week eligibility limit for most unemployment benefits rather than genuine labor market improvement.

The Labor Department’s report also showed the four-week moving average of claims, which smooths out week-to-week volatility, increased by 2,000 to 216,750.

The contradictory signals from different labor market indicators present challenges for policymakers and businesses alike. While headline unemployment figures remain relatively low by historical standards, the deteriorating pace of job creation and rising claims suggest underlying weakness that could portend broader economic challenges ahead.

Market participants will be closely watching next week’s comprehensive jobs report for November to gain better insight into the true state of the U.S. labor market as the year draws to a close.