Initial jobless claims rose unexpectedly last week despite an ongoing recovery in the US labor market, the Labor Department reported Thursday.
The first unemployment insurance claims for the week ended June 12 totaled 412,000, up from 375,000 the previous week. This is the highest number since May 15.
Economists polled by Dow Jones expected 360,000.
Almost all of the increase came from two states – Pennsylvania recorded a gain of 21,590, while California increased by 15,712, according to unadjusted data.
The surprise increase in claims comes after a series of gradual steps towards normality in the payroll image. Around the same time a year ago, the country was recording nearly 1.5 million new claims per week amid government-imposed business closures aimed at containing the Covid-19 pandemic.
As vaccinations progressed and cases, hospitalizations and deaths declined dramatically, employment continued to improve.
Continuing claims, which are a week behind the overall figure, were little changed at 3.52 million. A year ago, they were almost 18 million. The four-week moving average of open claims fell from 55,000 to just over 3.6 million, the lowest level since March 21, 2020.
Federal Reserve Chairman Jerome Powell noted the difficulties in bringing workers back to fill the record 9.3 million available jobs.
“Factors related to the pandemic, such as health care needs, lingering fears of the virus and unemployment insurance payments appear to be weighing on job growth,” Powell said at a press conference on Wednesday. after this week’s central bank meeting. “These factors are expected to subside in the coming months against a backdrop of increased vaccinations leading to faster job gains.”
Total benefit recipients declined to 14.83 million as of May 29, a reduction of more than half a million. Much of this is due to a sharp drop in the number of people enrolled in pandemic-related programs and states increasingly discontinuing enhanced benefits provided during the crisis.
The Fed noted progress in the labor market and growing inflationary pressures, as it indicated that the first wave of interest rate hikes could come sooner than expected. Two quarter point increases are now indicated for 2023.