Jobless Claims Surge to 8-Month High, Another Warning Sign for a Cooling Job Market — All Eyes on Friday’s Nonfarm Payrolls

The U.S. job market just flashed another warning sign, as initial jobless claims unexpectedly surged to an 8-month high—reinforcing concerns that the economy is cooling more rapidly than anticipated.

For the week ending May 31, initial jobless claims rose to 247,000, exceeding expectations of 235,000 and marking the highest level since the week of October 5. This represents an increase of 8,000 from the previous week’s revised figure. Meanwhile, the prior week's level was revised down slightly from 240,000 to 239,000.

The data followed disappointing ADP payroll numbers released on Wednesday. Private-sector job creation slowed sharply in May, rising by just 37,000, well below April’s downwardly revised 60,000 and far short of the 110,000 forecast by Dow Jones. It was the weakest monthly job gain in ADP’s data since March 2023.

Now, all eyes turn to Friday’s nonfarm payrolls report, the official employment number and the Federal Reserve’s preferred labor market gauge. Economists expect the report to show a gain of 125,000 jobs and an unchanged unemployment rate of 4.2%.

However, a significantly weaker-than-expected payroll print could increase pressure on the Fed to cut rates sooner rather than later, as recession risks begin to loom. The Federal Reserve’s next policy meeting is scheduled for June 17–18. While most economists currently don’t expect a rate cut this month—due to persistent trade-related uncertainty—the rising threat of labor market weakness could force a shift in the Fed’s stance, especially as recession fears gain traction.

President Donald Trump blasted Fed Chair Jerome Powell on Wednesday following the ADP release:

“Too Late! Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!”

he wrote on Truth Social.

Meanwhile, the European Central Bank announced a 25-basis-point rate cut on Thursday, lowering the deposit facility rate to 2%, down from its mid-2023 high of 4%. The widely anticipated move followed expectations of a stronger euro and lower energy prices, which led the ECB to revise its inflation outlook lower.

Note: The ECB has actually cut rates seven times during this cycle, not nine times as Trump claimed.