New State Unemployment Claims Rose Once more Final Week

The job market remains challenging. The government reported Thursday that the first state unemployment benefits rose last week.

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

At the same time, 152,000 new claims were made for Pandemic Unemployment Assistance, a federal program for freelancers, part-time workers, and others who are not routinely eligible for government benefits. That was a decrease of 85,000.

None of the figures are seasonally adjusted.

“It’s surprising and disappointing,” said Rubeela Farooqi, US chief economist at High Frequency Economics, of the surge in government filings. “However, we continue to assume that the labor market will continue to recover when large parts of the economy come back online.”

Gains in two states – California and New York – were more than responsible for the week’s nationwide surge. Oxford Economics said it was not aware of any particular factors that were driving claims in these states.

Claims rose to over a million at the beginning of the year, but they have has since declined, aided by the proliferation of vaccinations, the easing of restrictions on businesses in many states, and the arrival of $ 1,400 stimulus payments for most individuals, which should prop up consumer spending.

According to AnnElizabeth Konkel, an economist at Indeed Hiring Lab, the decline in regular entitlements has been a setback, but the decline in pandemic unemployment assistance claims has been encouraging. “It’s still moving in the right direction,” she said.

Diane Swonk, chief economist at accounting firm Grant Thornton, said the decline in pandemic unemployment assistance claims may be a sign that the most vulnerable workers are finally benefiting from the surge in hiring.

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

Overall, she added, the report is “a reminder of why the Federal Reserve is so patient – it’s really a show-me economy.”

Job postings have outpaced job hunting, she said, possibly because many workers have been unable to secure vaccines in high-risk areas and continue to be nervous about getting off the sidelines. “You want a job, but there is a hesitation and that’s understandable,” said Ms. Swonk.

On Friday, the government reported that employers created 916,000 jobs in March, double the number in February and the most since August. The unemployment rate fell to 6 percent, the lowest level since the pandemic began. Almost 350,000 people are back in work.

Still, there is still a lot to do.

Even after employment growth in March, the economy has 8.4 million fewer jobs than in February 2020. Entire sectors such as travel and leisure as well as restaurants and bars are only gradually recovering from the millions of job losses that followed the arrival of the pandemic.

“The damage figures are a reminder that while we still expect the labor market to recover, there is still a lot to do,” said Nancy Vanden Houten, chief economist at Oxford Economics. “Things are opening up, but not uniformly, and a lot of people are still unemployed.”

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