New weekly jobless claims unexpectedly increased last week, even as a broadening vaccination program and the return of some high-contact service jobs took place.
The Department of Labor released its weekly report on new jobless claims on Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:
Initial jobless claims, week ended March 27: 719,000 vs. 675,000 expected and a revised 658,000 during the prior week
Continuing claims, week ended March 20: 3.794 million vs. 3.750 million expected and 3.870 million during the prior week
Last week's jump in new jobless claims came as a surprise to economists looking for an improvement to a new pandemic-era low. However, the prior week's claims were revised down to 658,000 to show an even more marked improvement from the 684,000 previously reported. The new four-week moving average for new claims came down by 10,500 to 719,000 amid these revisions.
"This is a bit disappointing, given the sharp drop in Google searches for 'file for unemployment' last week, but note that last week’s claims were revised down to 658K from 684K," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in an email Thursday. "Taking the two weeks together it’s clear that the trend in claims is falling. We expect a sustained sharp decline in the second quarter as the economy reopens, making it easier for businesses under financial stress to hold onto employees."
This week's report also comes a year after the peak of pandemic-era initial jobless claims, when these came in at a record 6.867 million during the final full week of March 2020. Since then, new weekly claims have declined significantly— albeit with some choppiness over the last 12 months — and closely followed trends in virus-related restrictions and reopenings across the states.
"The recent improvement is consistent with accelerating labor market momentum as economic reopening continues," Nomura economist Lewis Alexander wrote in a recent note.
Still, it will likely take many more months for claims to return to their 2019 levels, when new claims averaged just over 200,000 per week.
Moreover, a staggering number of Americans remain out of work, based on the number of claimants across all programs. As of mid-March, about 18.2 million individuals were still claiming unemployment benefits of some form, including via the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation program, which offers extended benefits to those who have exhausted their regular state insurance.
The latest weekly jobless claims report also serves as a more timely indicator of the trajectory of the labor market recovery, and set the stage for Friday's monthly March jobs report from the U.S. Bureau of Labor Statistics. That report is expected to show non-farm payrolls rose by 650,000, or by the most since September, as the unemployment rate edged lower by 0.2 percentage points to 6.0%. The survey week for the monthly jobs report coincided with the initial jobless claims release during the week ended March 12, during which new claims rose week-over-week to 781,000.
State-by-state unemployment
By state, the largest increase in new jobless claims came out of Virginia last week, where new claims rose by nearly 31,000 on an unadjusted basis. Kentucky and Georgia also each reported increases of more than 10,000 new claims.
The increases in these states, as well as the smaller jumps in new claims reported in some other states, were only partially offset by decreases in states like Ohio, Massachusetts and Florida. Ohio saw another drop of nearly 16,000 new jobless claims last week, after seeing one of the largest declines alongside Illinois last week.
Meanwhile, Pennsylvania, Nevada and Alaska comprised the three states with the highest insured unemployment rates, or ratio of those claiming unemployment benefits to the total size of states' labor forces. Pennsylvania's insured unemployment rate came in at 5.5% for the week ended March 13, ticking down by 0.3 percentage points from a week earlier. Nevada's and Alaska's insured unemployment rates totaled 5.4% and 5.0%, respectively. Overall, the U.S. insured unemployment rate was 3.0% for the week ended March 13.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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