LABOR PAINS SPIKE
New jobless hike
The number of Americans newly seeking jobless benefits unexpectedly rose last week even as the summer surge in COVID-19 cases driven by the Delta variant appears to have peaked and has begun to decline, the feds said Thursday.
Initial filings for unemployment benefits, seen as a proxy for layoffs, rose to 362,000 last week, up 11,000 from the prior week’s level of 351,000, according to data released Thursday by the Labor Department.
The report marks the third consecutive week of rising new jobless claims in a surprise setback for the labor market.
That setback is likely being driven in part by the summer surge in COVID-19 cases, said Jamie Cox, managing partner for Harris Financial Group. Even as daily new cases appear to have peaked, there’s ongoing uncertainty about what the arrival of cold weather in much of the country could do to the state of the pandemic.
The rise over the past three weeks in new unemployment claims could also be in part driven by distortions left over from Hurricane Ida, according to Pantheon Macroeconomics’ chief economist Ian Shepherdson.
“The Ida effect should now fade from the numbers, but the seasonals are even more severe for the next couple weeks, so claims likely won’t return to their previous lows until mid-October,” Shepherdson said in a note.
On top of COVID concerns and reporting distortions, uncertainty over school closures and child care could also be holding back the labor recovery, said Sean Bandazian, an investment analyst for Cornerstone Wealth.
He said child-care concerns as well as hypersensitivity to COVID case counts could still be keeping people away from jobs even as openings remain at record highs.
The economic recovery has made strides in recent months, but inflation and a nationwide labor shortage have held back further progress, economists say.
While this month’s consumer price index report from the Bureau of Labor Statistics showed that some of the goods responsible for the huge spikes in prices this summer are beginning to ease, the labor market is still struggling.
The country added only 235,000 jobs in August, falling way short of expectations and stoking concerns that the economic recovery is stalling.
The overall rise in new jobless claims was fueled at least in part by jumps in California and Michigan, Bankrate’s senior economic analyst Mark Hamrick noted.
Weekly new claims have fallen substantially from the 2020 peak of about 6.1 million in a single week, but remain above pre-pandemic levels.
The country was averaging just over 200,000 new claims per week in 2019.
More than 2.8 million Americans remained on traditional state unemployment benefits as of Thursday, the feds added.
Continuing claims fell by just 18,000 from the prior week’s revised level, according to the new data. That figure stood at about 13 million at the same time last year, in the thick of the pandemic.