Weekly claims for unemployed higher than expected

First-time claims for unemployment insurance rose more than expected last week, despite other signs of recovery in the job market, the Labor Department reported on Thursday.

First-time applications for the week ended April 3 totaled 744,000, well above expectations for 694,000 from economists surveyed by the Dow Jones. The total represented an increase of 16,000 compared to 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 a more aggressive recovery in the labor market, as non-agricultural wages in March rose by 916,000, while the unemployment rate fell to 6%.

This was the highest job gain since August 2020, although unemployment remains well above the pre-pandemic low of 3.5%.

The ongoing claims have provided some good news on the labor front, with the total falling from 16,000 to 3.73 million. This is the lowest level for continuous demand since March 21, 2020, right after the Covid-19 pandemic hit and companies instituted wholesale layoffs along with the economic shutdown. Continuous claims run one week behind the main weekly number.

A year ago, that total was only 3.44 million, but it rose shortly thereafter due to massive layoffs in late March and early April.

California and New York accounted for the largest share of job growth, with increases of 38,963 and 15,714, respectively, according to unadjusted data. These increases were offset somewhat by a decline of 13,944 in Alabama and 10,502 in Ohio.

Economists said the filing of arrears could be a stubborn factor in the high number of applications, while increases in Covid cases for some states could also keep deposits high.

Markets reacted little to the data, with mixed stock futures and government bond yields mixed.

Despite recent progress, Federal Reserve officials say much more progress is needed on employment before thinking about policy change.

The minutes of the most recent meeting of the Federal Open Market Committee, launched on Wednesday, indicated a better outlook for the economy, although a continuing need for light policies.

Fed Governor Lael Brainard told CNBC on Wednesday that the outlook for the economy has “brightened considerably,” but there are still about 9 million fewer workers than before the pandemic. Central bank officials said they want to see not only full employment, but also inclusive earnings by income, race and gender.

“In that sense, we have a long way to go before the results are achieved,” Brainard said.

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