Initial claims rise slightly as federal layoffs and wildfire impact was muted

REAL ECONOMY BLOG | February 20, 2025

Authored by RSM US LLP

The number of initial claims for jobless benefits rose slightly to 219,000 last week, close to our forecast and the pre-pandemic average of 218,000.

New claims have trended lower since last August as the 13-week moving average touched 218,000 after peaking at 235,000, a sign that the labor market remains strong.

The impact of the mass layoffs in the federal government and the wildfires in California was minimal last week, as new filings fell in the Washington metro area and in California.

But we think that the impact had already been felt in the prior weeks, as new claims spiked in late January in those areas.

While we expect new filings in California to moderate back to normal, it is important to monitor the change in initial claims in the Washington area as more layoffs are expected.

Given the recent data, we do not see the pullback in federal jobs as having placed a major drag on payroll gains so far in February.

The federal government added only 9,000 net jobs in January, while the numbers in the prior months were smaller.

But if layoffs pick up as anticipated, we should expect the government net payroll change to show up negative.

That should only add more uncertainty to the initial jobless claims data, which has already been volatile and subject to seasonal noise.

Also in the report from the Bureau of Labor Statistics released Thursday, continuing claims rose to 1.869 million for the week ending Feb 8, a modest increase given how the series has been going sideways for the past four months.