The number of Americans claiming unemployment benefits rose for the third week in a row, a sign that the highly contagious delta variant could slow the recovery in the labor market.
Claims unexpectedly rose from 11,000 last week to 362,000, the Labor Department said Thursday, although economists expected the claims to go in the opposite direction. The four-week moving average of claims, which smoothes week-over-week highs and lows, rose for the first time in seven weeks to 340,000.
Since they surpassed 900,000 in early January, claims have declined fairly steadily as the economy rebounded from last year’s shutdowns. But they have increased with coronavirus infections.
Demands, which are a proxy for layoffs, remain high: Before the pandemic hit the United States hard in March 2020, they were typically around 220,000 per week.
U.S. employers have rapidly increased their hiring since they cut 22 million jobs in March and April 2020, as the coronavirus outbreak – and the closures intended to contain it – nearly brought economic activity to a halt. Since then, the economy has reclaimed an estimated 17 million jobs as businesses to open or extend hours of operation and Americans to return to bars, restaurants and hotels.
But hiring, which averaged more than 585,000 jobs per month this year, slowed to just 235,000 in August, as the delta variant disrupted the recovery. Restaurants and bars cut nearly 42,000 jobs last month, the first drop this year. Hires are expected to reach over 560,000 this month; the Ministry of Labor releases the September employment report next week.
In a research note, Contingent Macro Advisors said technical factors – seasonal adjustments and backlogs in California, where claims soared by nearly 18,000 – were responsible for the increase in deposits last week. “Overall, the increase in claims over the past three weeks is one to watch closely but is not yet alarming,” Contingent said.
A total of 2.8 million Americans were receiving some form of unemployment assistance the week of September 18, down 18,000 from the previous week. Earlier this month, the federal government halted additional aid – including $ 300 per week in addition to traditional state benefits – which was aimed at mitigating the economic impact of the pandemic.