Initial unemployment claims unexpectedly increased last week, signaling potential trouble for the U.S. economy. First-time filings for unemployment insurance totaled a seasonally adjusted 241,000 for the week ended April 26, an increase of 18,000 from the prior period. This figure surpassed the Dow Jones estimate of 225,000, according to the Labor Department's report on Thursday, marking the highest total since Feb. 22.

Continuing claims, which lag by a week and offer a broader perspective on layoff trends, rose to 1.92 million, up 83,000. This represents the highest level since Nov. 13, 2021. A significant portion of this increase appears to have originated from New York, where claims more than doubled to 30,043, based on unadjusted data. According to Sam Tombs, chief U.S. economist at Pantheon Macroeconomics, this surge may be linked to spring recess in New York public schools.

Tombs noted, "Nonetheless, the deterioration in the timeliest hiring and firing indicators over the last couple weeks suggests that jobless claims will trend up over coming weeks." The District of Columbia, which previously experienced a sharp increase due to President Donald Trump's efforts to reduce the federal government payroll, saw a modest rise last week.

This report surfaces amidst several concerning indicators for the economy, although the labor market has generally remained stable. On Wednesday, the Commerce Department reported that gross domestic product fell at a 0.3% annualized rate in the first quarter, marking the first contraction in three years. This decline was largely attributed to a surge in imports ahead of Trump's tariffs announced in early April, in addition to cooled consumer spending and a reduction in government outlays.

Despite the rise in initial claims, the longer-term trend remains consistent. The four-week moving average climbed 5,500 to 226,000, which aligns with recent trends. The Labor Department is scheduled to release its nonfarm payrolls total for April on Friday, with economists anticipating an increase of 133,000. The Thursday release will not influence that number, as it falls outside the survey week used for the report.