First-time unemployment insurance claims rose faster than expected last week despite other signs of a recovery in the labor market, the Labor Department reported Thursday.
Initial claims for the week ending April 3 totaled 744,000, well above the 694,000 expected by economists polled by Dow Jones. The total corresponds to an increase of 16,000 compared to the 728,000 revised upwards from the previous week. The four-week moving average rose to 723,750.
The news comes a week after a sign of more aggressive healing in the labor market as the non-farm workforce rose 916,000 in March while the unemployment rate fell to 6%.
This was the biggest job gain since August, although unemployment remains well above its pre-pandemic low of 3.5%.
Persistent demands provided some good news on the labor front, with the total dropping 16,000 to 3.73 million. This is the lowest level of ongoing claims since March 21, 2020, shortly after the Covid pandemic hit and companies initiated layoffs in wholesale in connection with the economic shutdown. Ongoing claims run one week after the weekly heading number.
A year ago it was only 3.44 million, but it rose shortly afterwards due to massive layoffs in late March and early April.
According to unadjusted data, California and New York accounted for most of the increase in employment, rising 38,963 and 15,714, respectively. Those gains were somewhat offset by a decline of 13,944 in Alabama and 10,502 in Ohio.
Economists said arrears filing could be a factor driving the stubbornly high number of claims, while spikes in Covid cases for some states could also keep filings high.
Markets reacted little to the data, with stock futures and government bond yields mixed.
Despite recent advances, Federal Reserve officials say much more progress is needed in the jobs area before considering policy change.
Minutes of the last meeting of the Federal Open Market Committee, released Wednesday, showed better outlook for the economy, although simple politics are still required.
Fed Governor Lael Brainard told CNBC on Wednesday that the economic outlook had “brightened significantly” but still employed about 9 million fewer workers than before the pandemic. Central bank officials have stated that they want to see not only full employment but inclusive gains in terms of income, race and gender.
“With that in mind, we still have some work to do before the results are achieved,” said Brainard.
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