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U.S. weekly jobless claims increase to two-month high; trend still low

Economic IndicatorsJul 22, 2021 12:31PM ET
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2/2 © Reuters. FILE PHOTO: People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira Karaoud/File Photo 2/2

By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose to a two-month high last week, a reminder that the labor market was far from being out of the woods as the nation confronts a resurgence in new COVID-19 infections.

Still, the weekly jobless claims report from the Labor Department on Thursday, showed more people are returning to work, a trend that bodes well for July's employment report. The Delta variant of the coronavirus is behind the latest outbreak, with states that have low vaccination rates worst affected.

"The rise in jobless claims this week tells us that the labor market's troubles are not completely behind us and the Delta variant may yet throw a monkey wrench into the economic recovery from the shortest recession in American history," said Christopher Rupkey, chief economist at FWDBONDS in New York.

Initial claims for state unemployment benefits increased 51,000 to a seasonally adjusted 419,000 for the week ended July 17, the highest level since mid-May. Data for the prior week was revised to show 8,000 more applications received than previously reported. Economists polled by Reuters had forecast 350,000 applications for the latest week.

There were large increases in filings in Kentucky, Michigan, Missouri and Texas. Some of these states have experienced a surge in new coronavirus cases.

Though economists do not expect large-scale business shutdowns similar to 2020, the latest wave of infections poses a risk to the economy. The National Bureau of Economic Research's business cycle dating committee declared on Monday that the pandemic recession, which started in February 2020, ended in April 2020.

Some of the rise in claims likely reflects difficulties smoothing the data for seasonal fluctuations following the upheaval from the pandemic. In normal years, layoffs are usually expected to decline in the second half of July. Before the pandemic, summer factory closures were the norm in early July, especially in the automobile industry.

The four-week average of claims, considered a better measure of labor market trends as it strips out weekly volatility from the data, rose only 750 to 385,250.

"We need to filter the noise in the data points and not lose sight of the big picture, which is that the trend line continues to head lower, said Anu Gaggar, senior global investment analyst at Commonwealth Financial Network in Waltham, Massachusetts. "There has been some distortion in data and in consensus expectations around automakers' annual retooling shutdowns that will work its way through the system in the upcoming weeks."

(Graphic: Jobless claims: https://graphics.reuters.com/USA-STOCKS/znpnedbxkvl/joblessclaims.png)

Claims have declined from a record 6.149 million in early April 2020, though they remain above the 200,000-250,000 range that is seen as consistent with healthy labor market conditions.

While other data on Thursday showed a rebound in sales of previously owned homes in June after four straight monthly declines, the pace was moderate as higher prices and low inventory remained constraints.

Stocks on Wall Street were mixed. The dollar was little changed against a basket of currencies. U.S. Treasuries were higher.

(Graphic: Existing home sales: https://graphics.reuters.com/USA-STOCKS/movanmkqkpa/ehs.png)

JOBLESS ROLLS SHRINKING

Last week's claims data covered the period in which the government surveyed business establishments for the nonfarm payrolls component of July's employment report. Claims were little changed between the June and July survey periods.

The economy created 850,000 jobs in June after adding 583,000 in May. Employment is 6.8 million jobs below its peak in February 2020. Claims data have been muddied by the federal government's expansion of benefits to people who do not qualify for the regular state programs. People have to apply for state programs to determine eligibility for federal benefits.

But the unemployed are returning to work. The claims report showed the number of people continuing to receive benefits after an initial week of aid dropped 29,000 to 3.236 million during the week ended July 10, the lowest level since the pandemic started.

The so-called continuing claims, which are reported with a one-week lag, have been falling since late June, and data next week will offer more clues on how hiring fared in July.

At least 20 states led by Republican governors have pulled out of federal government-funded unemployment programs, including a $300 weekly payment, which businesses claimed were encouraging unemployed Americans to stay at home.

There were a record 9.2 million job openings at the end of May. About 9.5 million people are officially unemployed.

Evidence is mixed on whether the early termination of federal benefits, which started on June 12 and will run through July 31, is encouraging job searches. The expanded benefits will lapse on Sept. 6 for the rest of the country.

Continuing claims have decreased in some states that have terminated federal benefits as well as in those that remain on the programs. They have also risen in some states that have prematurely ended expanded benefits. Texas reported a sharp rise in the week ended June 10.

"We expect the downward trend in continuing claims will gather momentum as top-off benefits end in all states in early September and other constraints on labor supply including lack of childcare recede," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York. "The latest surge in coronavirus cases may make some individuals more reluctant to return to work, however."

At least 12.6 million people were receiving benefits under all programs in early July, down 1.263 million from late June. The latest resurgence in coronavirus infections could sharpen criticism of the states that have terminated federal benefits.

"Businesses in hard-hit areas could be forced to curtail operations and shed positions if new restrictions are needed," said Andrew Stettner, senior fellow at The Century Foundation. "What will happen to the nearly four million workers whose unemployment benefits have been cut off early?"

U.S. weekly jobless claims increase to two-month high; trend still low
 

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Comments (29)
Benjamin McIntire
Benjamin McIntire Jul 23, 2021 7:31AM ET
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Lots of negative people below. Toxic in the rest of their lives too, no doubt.
Paul Richard
Paul Richard Jul 23, 2021 7:31AM ET
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And in the lives of others as well.
Darryl Allen
Darryl Allen Jul 22, 2021 9:42PM ET
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They changed the headline cuz they were getting ripped apart. Fake news gonna fake.
vic riv
vic riv Jul 22, 2021 9:02PM ET
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here's an idea 💡 only give them half...watch the jobless claims diminish.. the issue we have here is the politicians have made it easier to be lazy laxidasical and stay at home and abuse the American government in the taxpayers as we all dwindle away to financial state a third world country... I was off for a year and didn't take anything from my government..in short Americans get ass back to work...Don't ask what your country can do for you ask what you can do for your country..I'm going to hope for stronger people to represent our republic
James Andrews
James Andrews Jul 22, 2021 5:08PM ET
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What kind of degenerate is filing for unemployment NOW?
Heath Phillips
Heath Phillips Jul 22, 2021 5:02PM ET
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cancel unemployment stimulus addition and watch the workers flock back to work. Why work when you can make more at home doing nothing.
hit man
hit man Jul 22, 2021 1:27PM ET
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market will crack 10% soon
Annie Zhan
Annie Zhan Jul 22, 2021 12:29PM ET
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Who said USA is capitalism country?It is absolutely a socialism country
ZS Beck
ZS Beck Jul 22, 2021 10:25AM ET
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I was out of work for 5 weeks the whole time, since the pandemic .Ok I do construction trade , but I was not able to find anybody to work.Why? They were sitting home and collecting free money.
tim banks
tim banks Jul 22, 2021 10:25AM ET
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smart people.
Josh Davis
Josh Davis Jul 22, 2021 10:25AM ET
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tim banks you understand its not free right? Its paid for by working class tax money….so they are leeches, moochers
tim banks
tim banks Jul 22, 2021 10:25AM ET
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raise the wage if you want people to work. boom solved your problem hahaha
Sherman Shields
Sherman Shields Jul 22, 2021 10:25AM ET
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Did you have workers before pandemicg
Roger Miller
Roger Miller Jul 22, 2021 10:18AM ET
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High inflation, the job recovery is faltering, and still down 6.8 million jobs. The central planners are not doing so well.
ZS Beck
ZS Beck Jul 22, 2021 9:34AM ET
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how about end unemployment gift and no more free money?Like to see the September numbers
Stephen Willis
Stephen Willis Jul 22, 2021 9:30AM ET
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Covid-19 cases are raising because of illegals and unemployment is increasing. why? Democrats are Mar
Moi Meme
Moi Meme Jul 22, 2021 9:30AM ET
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Ah, you see it as always the fault of “the others”. Look in mirror.
Paul Richard
Paul Richard Jul 22, 2021 9:30AM ET
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haters going to hate and I see a lot of haters posting on this site.
NUNO LOUREIRO
NUNO LOUREIRO Jul 22, 2021 9:26AM ET
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OK the economy not doing so great.. But FED keep pumping, good news for the magical world of stocks, where all news are good, let's go ATH
MK MK
MK MK Jul 22, 2021 9:20AM ET
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I wonder how such high unemployment and huge GDP number can be explained? Foolish yankees lie and keep talking about "strength" of theirs economy
Bob Ally
Bob Ally Jul 22, 2021 9:20AM ET
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A lot of jobs are now automated. Its so simple to understand that
Ferdinando Riboni
Ferdinando Riboni Jul 22, 2021 9:15AM ET
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my boss got both his shots last month and last week got Covid .. and is still sick. I remember he never liked to take his mask off was so afraid my other friends no shots are living life ...
Show previous replies (7)
Josh Davis
Josh Davis Jul 22, 2021 9:15AM ET
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Bob Collins isnt it easy findinf this dtuff yet no one has the energy to look it up. Oh ok ill just take my shot.
Bob Collins
Bob Collins Jul 22, 2021 9:15AM ET
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Josh Davis  most people just believe what they hear on the official state-run CCP/DNC propaganda outlets: NBC, CNN, CBS, ABC, PBS, NPR, NYTimes, WaPo, Politico, Reuters, etc.
Bob Collins
Bob Collins Jul 22, 2021 9:15AM ET
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tim banks  The CDC has been lying to Americans for a year and a half. Why would anyone believe them about anything having to do with Covid-19?
Bob Collins
Bob Collins Jul 22, 2021 9:15AM ET
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tim banks   you seem to be completely Maddowed.
Ric Later
riclater211 Jul 22, 2021 9:15AM ET
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all your posts are pro media. this guy is a shill or a sheep.
John Klan
John Klan Jul 22, 2021 9:15AM ET
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Aliens are pouring into our country faster than the unskilled jobs they need can be created. More folks on welfare in other words.
FUTURES MOONING
FUTURES MOONING Jul 22, 2021 9:02AM ET
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Are Delta variant worries gonna magically come back today too Reuters?
jason xx
jason xx Jul 22, 2021 9:02AM ET
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yes
Jouni Matero
Jouni Matero Jul 22, 2021 8:58AM ET
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Was there anyone, besides Reuters, who didn't expect this?!?
Anson Wang
Anson Wang Jul 22, 2021 8:56AM ET
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Unexpectedly but they know. COVID isn’t over, the lockdown is, if people get sick and continue to show up to work like they have been it could cause other issues I have faith that will not occur as long as governments stay somewhat rational. People still need the unemployment if they catch the virus, and hopefully once they feel the touch of death they understand getting vaccinated is important.
Tyler Lee
Tyler Lee Jul 22, 2021 8:56AM ET
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That 99.98% survival rate "touch of death" huh? "The sheep says - Bahhhhh"
jason xx
jason xx Jul 22, 2021 8:56AM ET
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You should not have faith in the stupid. there's millions of wage slaves who keep going to work when sick because they hate being home.
Bob Collins
Bob Collins Jul 22, 2021 8:56AM ET
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Tyler Lee   Survival rate of getting the vaccine in the US is now 99.971%
Ric Later
riclater211 Jul 22, 2021 8:56AM ET
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tim banks all your posts are pro media. this guy is a shill or a sheep.
abubakar Mukhtar
abubakar Mukhtar Jul 22, 2021 8:55AM ET
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I maybe a lucky member, the day I signed up is the day market inflamed
Krasimir Balakov
Krasimir Balakov Jul 22, 2021 8:55AM ET
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Have they got it one time right? These people should work in Mcdonalds.
Bradley Jeko
Bradley Jeko Jul 22, 2021 8:55AM ET
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Does this even matter? The market is going to “shrug it off” like it has every other piece of negative economic data that’s come in over then last 16 months or so. Welcome to the biggest casino on the planet. Greed is a helluva drug.
Yoyogi Shark
Yoyogi Shark Jul 22, 2021 8:55AM ET
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"Greed" is such an ugly word. Now we call it "momentum".
Jan Buyle
Jan Buyle Jul 22, 2021 8:53AM ET
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High inflation and no jobs... FED dilemma... no where to go but gold & silver... FED is no way going to raise until full employment is reached...
Jouni Matero
Jouni Matero Jul 22, 2021 8:53AM ET
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Meaning never
Anson Wang
Anson Wang Jul 22, 2021 8:53AM ET
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Jouni Matero guess gold will have infinite demand from Jan Buyle.
Francesco Lucchesi
Francesco Lucchesi Jul 22, 2021 8:52AM ET
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it is totally expected
Ryan Yolo
Ryan Yolo Jul 22, 2021 8:51AM ET
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Writter reuters is trying to make is scared and want us to sell off our stocks
James Pattison
James Pattison Jul 22, 2021 8:50AM ET
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This is not unexpected… Democrats need a permanant underclass… need people forever dependant on the government…
 
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