Recurring applications for U.S. unemployment benefits rose to the highest since November 2021, extending a sharp increase over the past 1 1/2 month and signaling more people are staying out of work for longer.

Continuing claims, a proxy for the number of people receiving benefits, increased to 1.97 million in the week ended June 14, according to Labor Department data released Thursday. That was above all estimates in a Bloomberg survey.

The elevated level of continuing claims aligns with other surveys and data pointing to a slowdown in the labor market. This week a measure of job availabilities from a Conference Board survey that’s closely watched by economists fell to the lowest since March 2021.

Initial claims, however, decreased, to 236,000 in the week ended June 21, lower than economists anticipated. And the four-week moving average of new applications, a metric that helps smooth out volatility, also dipped.

The sizable increase in recurring filings for unemployment insurance combined with stable initial claims suggest employers are hitting the brakes on hiring, but holding onto their existing workers.

The U.S. central bank left interest rates steady last week, as policymakers await clarity on the potential impact of tariffs on the economy. Federal Reserve Chair Jerome Powell said at the time the jobs market wasn’t “crying out for a rate cut.” Speaking to lawmakers on this week, Powell reiterated that labor conditions remain solid.

At an event Thursday, Richmond Fed President Tom Barkin warned that by this summer, businesses may face pressure to raise prices due to higher tariffs — potentially triggering consumer pushback and, in turn, layoffs.

“If businesses lose volume when they raise prices, they will need to reduce costs. If they lose margin because they are unable to raise prices, they too will need to reduce costs,“ he said. “Either way, cost reduction would likely mean headcount reduction, suggesting that the current low hiring, low firing environment might come under threat.“

Before adjusting for seasonal factors, initial claims declined last week. Minnesota, Pennsylvania and Texas saw the largest drops.

In a separate report Thursday, the U.S. merchandise-trade deficit unexpectedly widened in May on the biggest drop in exports since the onset of the pandemic.

(With assistance from Jarrell Dillard.)

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