Jobless claims in the U.S. rose to 247,000 for the week ending May 31, reaching the highest level since last October.
The number of Americans filing for unemployment benefits reached an eight-month high at the end of May, signaling potential weakness in the labor market despite historically low overall levels. Ongoing trade tensions and uncertainty surrounding the Trump administration’s tariff policies are seen as key drivers of growing economic concern.
Unexpected Rise in Jobless Claims
According to the latest report from the U.S. Department of Labor, new claims for unemployment insurance increased by 8,000 to 247,000 for the week ending May 31, 2025. This marks the highest weekly figure since early October. Economists had anticipated around 237,000 new claims.
Labor Market Still Resilient, But Warning Signs Emerge
Since the COVID-19 pandemic disrupted the U.S. economy, jobless claims have generally hovered in a historically healthy range of 200,000 to 250,000. However, the recent upward trend in filings could signal the beginning of a slowdown in the labor market, analysts warn.
Impact of Trump’s Trade Policies on Business Confidence
Many major corporations, in their latest earnings reports, have either downgraded their revenue and profit outlooks for 2025 or refrained from issuing forecasts altogether. A significant factor behind this cautious stance is the Trump administration’s unpredictable trade policy, particularly its aggressive use of tariffs.
While President Trump has recently paused or scaled back several tariff threats, fears persist that a global economic slowdown driven by these measures could ultimately disrupt the strength of the U.S. job market.
Fed Expresses Concern Over Inflation and Unemployment
At its latest meeting, the Federal Reserve opted to keep the benchmark interest rate steady at 4.3% for the third consecutive time. Fed Chair Jerome Powell highlighted the unusual combination of elevated risks of both inflation and rising unemployment, complicating the Fed’s dual mandate of price stability and maximum employment. Powell added that tariffs have weakened consumer and business sentiment alike.
Cooling Labor Market Reflected in Broader Data
While job openings unexpectedly increased in April, other labor indicators suggest softening confidence among American workers. The number of people voluntarily quitting their jobs — typically a sign of confidence in the labor market — declined, and layoffs edged higher.
In a key shift, the labor market now offers roughly one job opening per unemployed person, down from two openings per job seeker as recently as December 2022, reflecting a notable decline from the hiring boom of 2021 to 2023.
All Eyes on Friday’s Monthly Jobs Report
The Department of Labor is set to release its more comprehensive monthly employment report on Friday. Analysts expect that U.S. employers added only 130,000 jobs in May, a decline from the 177,000 positions added in April — reinforcing concerns about a gradual cooling of the labor market.
U.S. Economy Contracts in Q1 2025
According to revised government data, the U.S. economy shrank at an annual rate of 0.2% in the first quarter of 2025. This updated figure shows a slight improvement from earlier estimates. The contraction was largely attributed to a surge in imports, as U.S. companies rushed to bring in foreign goods ahead of Trump’s sweeping tariffs taking effect.
