Jobless claims rise slightly to 353,000 as Delta variant surges

The number of Americans filing initial claims for jobless benefits rose for the first time in five weeks, even though the economy and job market have been recovering briskly from the coronavirus pandemic.

The Labor Department reported Thursday that jobless claims edged up to 353,000 from 349,000 a week earlier. The weekly count has fallen more or less steadily since topping 900,000 in early January, helped by the rollout of COVID-19 vaccines that has encouraged businesses to reopen and has lured consumers out of their homes to restaurants, bars and shops. But a resurgence of cases linked to the highly contagious Delta variant has clouded the economic outlook. 

"The downward trend in claims continues, despite the Covid-Delta wave, presumably because the bar to letting staff go is very high, given the tightness of the labor market," Ian Shepherson, chief economist with Pantheon Macroeconomics, said in a research note. "Firms can't be sure they'll be able to rehire people laid off now."

The job market has been rebounding with vigor since the pandemic paralyzed economic activity last year and employers slashed more than 22 million jobs in March and April 2020. The United States has since recovered 16.7 million jobs, and employers have added a rising number of jobs for three straight months, including a robust 943,000 in July. Job openings have been posted — a record 10.1 million in June — faster than applicants are lining up to fill them.

Some employers blame their labor shortages on supplemental unemployment benefits from the federal government — including $300 a week on top of regular state aid — for discouraging some of the jobless from seeking work. In response, many states have withdrawn from the federal programs, which expire nationwide next month.

Economists point to other factors that have kept workers out of the job market — including difficulty finding or affording child care, fear of becoming infected by the virus and hope among some workers of finding a better job than they had before the pandemic.

"We expect jobless claims to remain on a downward path as the labor market continues to recover, but progress will be more fitful as claims get closer to pre-pandemic levels," Nancy Vanden Houten, lead economist at Oxford Economics, said in a research note. "We don't expect the end of emergency benefits to lead to an immediate jump in employment."

The economy remains 5.7 million jobs shy of what it had in February 2020.

Some 12 million Americans were receiving jobless assistance as of the first week of August, the most recent data available.