Latest coronavirus: New US jobless claims unexpectedly surge from most since March
New claims for unemployment benefits in the United States surged unexpectedly last week from a pandemic-era low, although labor market conditions continue to improve despite volatile weekly figures .
The pace of jobless claims filed for regular public programs increased by 51,000 in the week ending July 17 to 419,000, the US Department of Labor said Thursday. This compares to expectations of a drop to 350,000 new claims, according to a Reuters survey of economists.
This marked the biggest weekly increase in claims since March and was the highest level since May.
The report also showed an increase from 13,970 in applications for federal pandemic unemployment assistance – which provides benefits to the self-employed and workers in concert – to 110,257.
“As we expect labor market conditions to improve over the remainder of 2021, the surge in demands is a reminder that progress will not follow a straight line,” said Nancy Vanden Houten, economist at Oxford Economics.
Federal unemployment assistance linked to the pandemic is set to expire on September 6, but dozens of states have already ended the benefits, with Republican policymakers in particular arguing that these unemployment programs have discouraged people from looking for work.
Thursday’s report showed Texas, which ended federal benefits last month, and Michigan reported the largest increases in unemployment benefits last week, according to preliminary figures. However, states ending benefits prematurely, led by Texas, accounted for four-fifths of the decline in federal unemployment assistance.
The number of Americans claiming new unemployment benefits has gradually declined this year as the US economy continues to reopen. However, concerns about further restrictions in response to the contagious Delta variant, which now accounts for 83% of new cases in the United States, scared investors this week.
“Investors probably don’t want to hear it, but the [Federal Reserve] will stick to the line “too early to tell, so too early to make decisions” for several months to come, ”said Ian Shepherdson, economist at Pantheon Macroeconomics.
Fed Chairman Jay Powell has dismissed claims that the central bank has been complacent about rising inflation that some fear will undermine the US economy. Fed officials have said they will hike rates once full employment is reached and when inflation hits 2 percent and is on track to moderately exceed it for some time.
About 12.6 million Americans continue to claim unemployment benefits more than a year after the start of the pandemic.