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

Published 07/22/2021, 08:36 AM
Updated 07/22/2021, 12:31 PM
© 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

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.

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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:

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:


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.

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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.

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"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?"

Latest comments

Lots of negative people below. Toxic in the rest of their lives too, no doubt.
And in the lives of others as well.
here's an idea 💡 only give them 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 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
cancel unemployment stimulus addition and watch the workers flock back to work. Why work when you can make more at home doing nothing.
market will crack 10% soon
Who said USA is capitalism country?It is absolutely a socialism country
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.
you understand its not free right? Its paid for by working class tax money….so they are leeches, moochers
raise the wage if you want people to work. boom solved your problem hahaha
Did you have workers before pandemicg
High inflation, the job recovery is faltering, and still down 6.8 million jobs. The central planners are not doing so well.
how about end unemployment gift and no more free money?Like to see the September numbers
Covid-19 cases are raising because of illegals and unemployment is increasing. why? Democrats are Mar
Ah, you see it as always the fault of “the others”. Look in mirror.
haters going to hate and I see a lot of haters posting on this site.
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 ...
 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?
  you seem to be completely Maddowed.
all your posts are pro media. this guy is a shill or a sheep.
Aliens are pouring into our country faster than the unskilled jobs they need can be created. More folks on welfare in other words.
Are Delta variant worries gonna magically come back today too Reuters?
Was there anyone, besides Reuters, who didn't expect this?!?
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.
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.
  Survival rate of getting the vaccine in the US is now 99.971%
all your posts are pro media. this guy is a shill or a sheep.
I maybe a lucky member, the day I signed up is the day market inflamed
Have they got it one time right? These people should work in Mcdonalds.
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.
"Greed" is such an ugly word. Now we call it "momentum".
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...
Meaning never
guess gold will have infinite demand from Jan Buyle.
it is totally expected
Writter reuters is trying to make is scared and want us to sell off our stocks
This is not unexpected… Democrats need a permanant underclass… need people forever dependant on the government…
The only quibble I would have with this article is the word "unexpectedly." For most of us, this is EXACTLY would was expected to happen.  The downbeat headline shows that even the Liberal cheerleaders like Reuters can't dress up this turkey.
Its not “Unexpected”....its been the trend for the last 1.5 yeats.
The marxist regime is doing everything in its power to destroy the US economy. Why would this be unexpected?
I think youre too pessimistic. If people get sick, they will file for unemployment - it is the wise thing to do to ask for help, if this affects the market, I will see it as a signal to further my gains due to instability in the monetary system that has essentially been established and have continued to evolved since the dawn of man.
"Unexpectedly"... lol
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