The latest jump in weekly jobless claims isn't quite a surefire sign of more economic pain ahead, according to some economists.
First-time unemployment filings in the U.S. rose more-than-expected in a report out Thursday, reaching 229,000 during the week ended June 4. This marked the highest level for initial claims since mid-January, when the U.S. was still grappling with a surge in Omicron-related virus cases.
Thursday's data also brought the four-week moving average for new claims — which smooths out volatility in the weekly data — up to 215,000, or the highest since February. During the prior week, initial claims came in at 202,000.
Given claims data are reported on a weekly basis, rather than the monthly cadence of the non-farm payrolls report, jobless claims data serves as a closely watched indicator of real-time conditions in the U.S. economy. This high frequency data can also act as an early harbinger of a downturn — but it's too early to make that call just based on Thursday's report alone.
"The trend probably is rising, but it is not alarming," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in an email Thursday morning. "The trend in claims has risen from the mid-March lows, though we are far from sure that the lowest readings — averaging just 170.5K in the four weeks through the first week of April — were real; we think they were flattered by the seasonals."
And indeed, claims have risen notably after reaching a more than 50-year low in March. However, even after the past week's jump, claims are still only marginally above levels from before the pandemic. Claims averaged about 218,000 per week throughout 2019.
And continuing claims, which track the total number of Americans still collecting unemployment benefits on regular state programs, held near multi-decade lows in Thursday's report. These held steady at 1.306 million, bringing the four-week moving average to below 1.32 million, or the lowest since January 1970.
"Overall, beyond weekly moves, levels remain low, although filings have moved up from a 166K reading in March," Rubeela Farooqi, chief U.S. economist for High Frequency Economics, wrote in a note Thursday morning. "The data merit watching for any changes in the underlying trend over coming weeks and months."
Shepherdson, for his part, also suggested claims may stabilize near current levels.
"Next week’s reading likely will be very close to this week’s, but claims should then drop slightly until the end of the month," Shepherdson added, noting that planned auto industry shutdowns will likely make this data quite noisy into July.
Others, however, took the message sent by the latest jobs data as more equivocal.
"The rise of initial unemployment claims does fit with anecdotal evidence provided by CEOs that they are closely watching their head counts which often covers up for their actions where they are quietly giving out pink slips," Chris Rupkey, chief economist at FWDBONDS, said in an email Thursday.
"One thing is for certain, joblessness has nowhere to go but up with inflation boosting costs for every company across the country and cost control measures must be implemented which will likely fall on the backs of labor," Rupkey added. "Jobless claims say the economy is slowing down, but there is uncertainty about whether this recession indicator is making the right call."
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.