New state unemployment claims increased last week for the first time in nearly four months, disturbing evidence that the struggling economy is backsliding at a time when coronavirus cases are on the rise.
After a flood of claims as the pandemic shut businesses early in the spring, weekly unemployment filings fell sharply before flattening in June. But Thursday, the Labor Department reported more than 1.4 million new applications for state benefits last week, up from about 1.3 million in the preceding two weeks.
Another 975,000 jobless workers filed for benefits through an emergency federal program, also an increase. Unlike the figure for state claims, that number is not seasonally adjusted.
Claims are rising just as a $600-a-week federal supplement to jobless benefits is set to expire and Republican infighting has kept the party from putting forward a proposal for further aid, much less negotiating with Democrats on a bill.
The discouraging news from the Labor Department followed a Census Bureau survey showing that 4 million fewer people were employed last week than the week before. It was the fourth straight decline, suggesting that nearly all the job gains since mid-May had been erased.
“At this stage, you’re seeing all the wrong elements for recovery,” said Gregory Daco, the chief U.S. economist at Oxford Economics. “A deteriorating health situation, a weakening labor market and a softening path for demand.”
Daco said the rush to reopen in many states had been counterproductive, contributing to the increasing virus caseloads, particularly in the South and West, that are compelling businesses to close again.
“Increasingly I fear that we’re going to see net payrolls in July will show an actual decline” when the next monthly jobs report is released, he added.
About 30 million people — roughly 1 in 5 American workers — are drawing jobless benefits. Without congressional action to extend the weekly federal supplement, the unemployed will be left with less money to pay for food, medical care, rent and other bills. Also nearing an end is the federal Paycheck Protection Program, which provided small businesses with emergency loans that spared many workers from layoffs.