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Initial claims for state unemployment benefits totaled a
seasonally adjusted 412,000 for the week ended June 12, compared
to 375,000 in the prior week, the Labor Department said on
Thursday. That was the first increase since late April.
Economists polled by Reuters had forecast 359,000 applications
for the latest week.
The economy is ironically facing a labor crunch, despite
employment being still 7.6 million jobs below its peak in
February 2020. A shortage of childcare facilities is keeping
some parents, mostly women, at home.
Generous government-funded unemployment benefits, including a
$300 weekly check, have also been blamed, as well as a
reluctance to return to work out of fear of contracting COVID-19
even though vaccines are widely accessible. Pandemic-related
retirements and transitions into new careers are also factors.
The Federal Reserve on Wednesday held its benchmark short-term
interest rate near zero and said it would continue to buy $120
billion in bonds each month to fuel the economic recovery. The
U.S. central bank brought forward its projections for the first
post-pandemic interest rate hikes into 2023 from 2024.
Fed Chair Jerome Powell told reporters he was "confident that we
are on a path to a very strong labor market, a labor market that
shows low unemployment, high participation, rising wages for
people across the spectrum."
A handful of states, including Iowa and Alaska, either
terminated all federal government-funded benefits or just the
$300 supplement last Saturday. Their fellow Republican governors
in 21 other states, including Texas and Florida, will end these
benefits for residents between June 19 and July 10. For the rest
of the country, the expanded benefits will lapse on Sept. 6.
"It will be particularly important to see if the end of benefits
results in an increase in employment or labor force
participation in these states over the summer months," said
Veronica Clark, an economist at Citigroup in New York.
"It will be important to see if the end of benefits in these
states results in rising employment, as this would be a sign of
possible labor market trends into the fall when benefits expire
nationally."
There are a record 9.3 million job openings, while 9.3 million
people are officially unemployed.
Though layoffs are easing, initial claims remain well above the
200,000 to 250,000 range that is viewed as consistent with
healthy labor market conditions. Claims have, however, dropped
from a record 6.149 million in early April 2020.
Last week's claims data included the period during which the
government surveyed business establishments for the nonfarm
payrolls component of June's employment report. The economy
created 559,000 jobs in May after adding 278,000 in April.
To get a better picture of how hiring fared in June, economists
will await data next week on the number of people continuing to
receive benefits after an initial week of aid. The so-called
continuing claims are reported with a one-week lag.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
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