29 July 2021

U.S. Unemployment Claims Rise, Pausing Recent Downward Trend

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Worker applications for unemployment benefits rose during the first half of February, pausing a downward trend that pointed to an improving labor market amid other signs that the economic recovery is picking up.

The Labor Department on Thursday said the increase to 861,000 last week was accompanied by a 55,000 upward revision of claims in the prior week, on a seasonally adjusted basis. That put the four-week moving average, which smooths out week-to-week fluctuations, at 833,000, slightly lower than the prior week and near the top of a roughly 750,000 to 850,000 range since last October.

Jobless claims—a proxy for layoffs—have remained above the pre-coronavirus pandemic peak of 695,000 since the start of the pandemic last March.

“Things are not as stalled as they were in January, but we don’t have any momentum,” said Marianne Wanamaker, a labor economist at the University of Tennessee, Knoxville, and former adviser to the Trump White House.

While the initial reopening of the economy last summer from pandemic-related closures led to quick labor market gains, Ms. Wanamaker said she expects job growth over the next few months to be more gradual. “You’re not going to see rapid declines,” she said.

The economy is showing other signs of stepped-up growth in the new year. On Wednesday, the government said retail sales, a measure of purchases at stores, restaurants and online, jumped a seasonally adjusted 5.3% in January from a month earlier, helped by pandemic-related federal stimulus payments distributed to households at the start of the year. Manufacturing output also has neared pre-pandemic levels.

The job market could be aided by government aid—both a $900 billion stimulus package signed into law in December and a new $1.9 trillion plan under consideration in Congress—and eased business restrictions in some states. California lifted its stay-at-home order in late January, and cities such as New York and Washington have allowed restaurants to resume indoor dining.

Ms. Wanamaker said it may take significant improvements in some struggling sectors of the economy, such as leisure and hospitality, to mark a turning point for the labor market. That might have to wait until at least the spring, she said, when temperate weather will make it easier to gather outdoors and frequent businesses.

Last week’s overall jobless claims number could have been lower than reported. The Ohio Department of Job and Family Services for the week ended Feb. 13 reported 147,000 claims, of which it suspects at least 33,000 to be fraudulent, according to a release from the department. The state had previously said a spike in claims at the beginning of February was likely driven by attempted fraud.

This week’s winter storms in Texas and other parts of the country could lead to short-term anomalies in jobless claims figures in the coming weeks, said AnnElizabeth Konkel, economist at jobs site Indeed. Such blips are usually ironed out in later data revisions.

The total number of workers collecting unemployment benefits through regular state programs was about 4.5 million in the week ended Feb 6. So-called continuing claims are well below pandemic highs but still more than double the levels seen a year ago.

“When you step back and look at the pattern, it’s evident that there is still so much economic pain because of the coronavirus,” Ms. Konkel said.

While some job seekers are finding work, others have had trouble finding a job.

Omar Soorma said he was furloughed from his job last spring as a medical technologist at a hospital near Columbus, Ohio, and hasn’t been called back to work.

Mr. Soorma, 73 years old, said he would have kept working had he not been let go. He applied to four other hospitals in the area, without any luck so far, and isn’t willing to relocate for work, given his age. Now, he is pondering retirement.

His son, who graduated from medical school last spring, is encouraging him to embrace the idea, Mr. Soorma said. “He said ‘Dad, don’t work anymore.’ ”

Mr. Soorma said he had been in the workforce for over four decades and had never received unemployment aid before filing his first claim in May. Loss of a job has been “a big loss” for him, he said. “You don’t know how to find your bearing, find your balance.”

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