New jobless claims increased last week

California and New York numbers account for the rise nationwide.

California, New York numbers spur second consecutive weekly increase nationally after new claims had hit a pandemic low.

The U.S. job market remains challenging, with the government reporting Thursday that initial claims for state unemployment benefits rose last week.

A total of 741,000 workers filed first-time claims for state jobless benefits last week, an increase of 18,000, the Labor Department said. It was the second consecutive weekly increase after new claims hit a pandemic low.

At the same time, 152,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits. That was a decline of 85,000.

Neither figure is seasonally adjusted.

“It’s surprising and disappointing,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said of the increase in state filings. “But our expectation remains that as large sections of the economy come back online, recovery in the labor market will be ongoing.”

Increases in two states — California and New York — more than accounted for the week’s rise nationwide. Oxford Economics said it was unaware of any particular factors that might have driven claims higher in those states.

Claims rose above 1 million early in the year but have come down since then, helped by the spread of vaccinations, the easing of restrictions on businesses in many states and the arrival of $1,400 stimulus payments for most individuals.

While the rise in regular claims was a setback, the drop in Pandemic Unemployment Assistance claims was encouraging, according to Annelizabeth Konkel, an economist at Indeed Hiring Lab.

“It’s still movement in the right direction,” she said.

Diane Swonk, chief economist at the accounting firm Grant Thornton, said the decline in Pandemic Unemployment Assistance claims could be a sign that the most vulnerable workers were finally benefiting from the uptick in hiring.

“They’ve been living on fumes, but it suggests that some of these gig workers don’t need the unemployment insurance as much as they did before,” she said.

Last Friday the government reported that employers added 916,000 jobs in March, twice February’s gain and the most since August. The unemployment rate dipped to 6%, the lowest since the pandemic began, with nearly 350,000 people rejoining the labor force.

Still, there is plenty of ground to make up.