Sign of slowing post-pandemic recovery
The number of Americans seeking new jobless claims rose last week, ending six straight weeks of declines, the feds said Thursday.
The new filings, seen as a proxy for layoffs, rose to 412,000 last week, up from a revised estimate of 375,000 reported the prior week, according to data released Thursday by the US Department of Labor.
While far below the number of weekly new claims reported last year, initial claims still remain substantially higher than pre-pandemic levels. The nation was averaging just over 200,000 new claims per week in 2019.
“The six-week winning streak has come to an end as new jobless claims increased last week, back above the 400,000 level, along with a bump up for continuing claims,” said Mark Hamrick, senior economic analyst at Bankrate.
Continuing claims also rose slightly from nearly 3.5 million the week before, the feds said. That figure stood at about 19 million at the same time last year, in the thick of the pandemic.
The number of Americans collecting unemployment benefits through regular state programs remains more than twice as high as before COVID-19 gutted the economy.
Including Americans on all federal pandemic-related benefits programs, the number of continuing claims was 14.8 million in the week ending May 29.
The surprise increase in new claims heightens economists’ concerns that the labor market may not recover as rapidly as once expected.
“What the claims information doesn’t tell us is how much faster the job market will heal or where socalled full employment will ultimately be,” Hamrick said. “The easiest part of putting people back to work occurred from May through August of last year when more than a million jobs per month were added to payrolls.”
The US added 559,000 jobs last month, fewer than the 671,000 expected by economists, with some hailing the figure as a sign of progress and others saying US hiring continues to disappoint.
The fresh data come even as US job openings soared to a new record 9.3 million in April, according to the Department of Labor. Some economists have said they expect to see more Americans fill some of those openings as enhanced federal jobless benefits end.
“The path ahead is uncertain with many questions yet to be answered. We don’t know how successful businesses will be in finding the workers they want or how many they will ultimately hire,” Hamrick said. “Another unfolding mystery: We don’t know how many individuals will opt to return to the workforce or their old jobs, or will be willing to accept the wages they’re offered.”
At least 25 states are looking to lure workers back into the labor market by withdrawing from the federal program that provides an extra $300 in weekly unemployment benefits.
President Biden confirmed last week that he would let the federal program expire after Labor Day, but some states will pull out of it as soon as this week.
Some companies, politicians and economists have said the extra benefits add up to more than what businesses can afford to pay people, particularly for entry-level jobs.
Some economists have warned that the labor shortage could hold back the US economic recovery, while others have urged patience as businesses grapple with temporary issues in the hiring pool.