The number of Americans filing for first-time unemployment benefits rose unexpectedly last week, showing that layoffs remain a challenge even as the U.S. economy gradually reopens.
Some 770,000 people applied for unemployment benefits in the week ending March 13, the Labor Department said Thursday. That's an increase of 45,000 from .
Another 282,000 people filed for Pandemic Unemployment Assistance, a special federal aid program for self-employed and gig workers. That number is down nearly 200,000 from the prior week.
Layoffs are continuing despite the overall job market showing improvement. Employers in February added a robust 379,000 jobs, the most since October and a sign the economy is strengthening as the number of COVID-19 vaccinations grow, consumers spend more and states and cities ease business restrictions.
"The labor market is broadly moving in the right direction, albeit slowly," Indeed Hiring Lab economist AnnElizabeth Konkel said in a report. "But to get millions of jobless back to work, gains need to accelerate."
Prior to the pandemic, applications for unemployment aid hovered around 250,000 a week and had never topped 700,000, even at the peak of the Great Recession of 2008-2009.
The total number of people collecting any sort of benefit fell to 18.2 million as of the end of February, the most recent data available. That's a drop of 1.9 million from the week before.
Economists are betting that as the weather warms and more Americans get vaccinated against COVID-19, consumers will spend more time outside their homes and boost their spending. Many states are lifting restrictions on indoor dining and large gatherings, with Arizona, Connecticut, Texas, Maryland, Mississippi, West Virginia and Wyoming all easing or eliminating social-distancing and capacity guidelines in the last two weeks.
"[T]he labor market is set for a dramatic improvement through the rest of 2021. Vaccine distribution is accelerating rapidly, coronavirus caseloads are much lower than they were in late 2020 and early 2021, states are allowing more economic activity, and the start of spring will allow for more outdoor activities," Gus Faucher, chief economist at the PNC Financial Services Group, said in a note. "The huge stimulus bill that President Biden signed last week will put cash in consumers' pockets to spend and provide aid to struggling businesses."
The Associated Press contributed reporting.