Jobless Rate Likely Rose in June Due to Tariff Disruptions
By Reuters | 26 Jun, 2025

Uncertainty caused by Trump's erratic tariffs has caused a hiring slowdown while more layoffs loom.

A pedestrian passes a "Help Wanted" sign in the door of a hardware store in Cambridge, Massachusetts, U.S., July 8, 2022. REUTERS/Brian Snyder/File Photo

The number of Americans filing new applications for jobless benefits fell last week, but the unemployment rate could rise in June as more laid off people struggle to find work.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 236,000 for the week ended June 21, the Labor Department said on Thursday. Economists polled by Reuters had forecast 245,000 claims for the latest week. The data included last week's Juneteenth National Independence Day holiday. Claims tend to be volatile around public holidays. 

Technical factors as well as the start of the summer school breaks have accounted for some of the recent rise in claims, which have pushed them to the upper end of their 205,000-250,000 range for this year. 

Non-teaching staff in some states are eligible to file for unemployment benefits during the summer holidays. 

Nonetheless, layoffs have picked up and economists say President Donald Trump's broad import tariffs are making it difficult for businesses to plan ahead.

The Federal Reserve has responded to the economic uncertainty by pausing its interest rate cutting cycle. Fed Chair Jerome Powell told lawmakers this week the U.S. central bank needed more time to gauge if tariffs pushed up inflation before considering lowering rates. 

The Fed last week left its benchmark overnight interest rate in the 4.25%-4.50% range where it has been since December.

Still, layoffs remain historically low, accounting for much of the labor market stability. Hiring has, however, been lackluster, making it harder for many unemployed to find new opportunities.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 37,000 to a seasonally adjusted 1.974 million during the week ending June 14, the highest level since November 2021, the claims report showed.

The so-called continuing claims covered the week during which the government surveyed households for June's unemployment rate.

The elevated continuing claims have left several economists to expect that the unemployment rate rose to 4.3% in June from 4.2% in May. A survey from the Conference Board this week showed the share of consumers who viewed jobs as being "plentiful" dropped to the lowest level in more than four years in June.

"The rising volume of layoffs is likely to translate into an increase of at least one tenth of a percent in the national jobless rate in the June employment report," said Lou Crandall, chief economist at Wrightson ICAP.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)