Weekly jobless claims increase more than expected; labor market remains stable

WASHINGTON - The number of Americans filing claims for unemployment benefits increased more than expected last week, but the underlying trend remained consistent with a stable labor market.

Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 225,000 for the week ended May 30, the Labor Department said on Thursday. Economists polled by Reuters had forecast 213,000 claims for the latest week. The four-week moving average of claims increased only 6,500 to 214,750.

Despite high-profile job cuts by technology firms related to the adoption of artificial intelligence, layoffs have remained low, confining claims to a 190,000-230,000 range this year.

U.S.-based employers announced 97,006 job cuts in May, about 39% of them in the technology sector, a separate report from global outplacement firm Challenger, Gray and Christmas showed on Thursday. That was up 16% from April. 

Still planned job cuts rose only 3% compared to the same period last year. Though the Middle East conflict has yet to make a noticeable impact on the labor market, uncertainty is growing. The U.S.-Israel war with Iran, now in its fourth month, has severely disrupted the supply of commodities and boosted prices of goods including energy, aluminum and fertilizers. 

The Federal Reserve’s Beige Book report on Wednesday said employment showed “little to no change” in May, and that “most districts described a low-hire, low-fire environment.” It added that “hiring remained selective and primarily focused on critical roles or attrition replacement.”

Low layoffs are anchoring the labor market. The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, fell 8,000 to a seasonally adjusted 1.777 million during the week ended May 23, the claims report showed.

The claims data have no bearing on the closely watched employment report for May, due to be released on Friday, as they fall outside the survey period. 

Nonfarm payrolls likely rose by 85,000 jobs in May after rising 115,000 in April, a Reuters survey of economists predicted. The unemployment rate is forecast unchanged at 4.3%.

The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday showed hiring decreased and layoffs fell in April, suggesting the increase in payrolls that month was due to lower layoffs.

Q1 worker productivity, labor costs revised lower

U.S. worker productivity growth slowed faster than initially thought in the first quarter, but the underlying trend remained strong and a boost is expected from businesses adopting artificial intelligence for many roles.

Nonfarm productivity, which measures hourly output per worker, increased at a downwardly revised 0.3% annualized rate last quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday. That was the slowest since the first quarter of 2025. Productivity was previously estimated to have risen at a 0.8% pace last quarter. 

Economists polled by Reuters had forecast productivity growth would be revised down to a 0.5% pace. Productivity grew at a 2.8% rate from a year ago, instead of the 2.9% pace estimated last month. It has grown at a 2.1% rate from the fourth quarter of 2019 through the first quarter of 2026.

The softness in the first quarter was flagged by last week’s downgrade to gross domestic product growth to a 1.6% rate from the previously reported 2.0% pace. Productivity grew at an unrevised 1.6% rate in the October-December quarter.

Economists believe the rising integration of AI will boost productivity and rein in labor costs. 

Unit labor costs - the price of labor per single unit of output - increased at a 1.8% rate last quarter. That was a downward revision from the 2.3% pace reported last month. Fourth-quarter growth in unit labor costs was lowered to a 2.1% rate from the previously reported 4.6% pace.

Economists had expected unit labor costs to increase at a 2.5% rate last quarter. They grew at 0.5% rate from a year ago. Hourly compensation increased at a 2.1% rate last quarter and grew at a 3.3% pace from a year ago.

Copyright Reuters or USA Today Network via Reuters Connect

This story was originally published June 4, 2026 at 9:14 AM.