U.S. weekly jobless claims present shock rise to highest degree in weeks

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Initial jobless claims rose unexpectedly last week despite a continued recovery in the US labor market, the Labor Department reported Thursday.

Initial unemployment insurance enrollment for the week ending June 12 totaled 412,000 compared to 375,000 in the previous week. That was the highest number since May 15th.

Economists polled by Dow Jones had expected 360,000 new claims for the past week.

Most of the surge came from two states – Pennsylvania was up 21,590, while California was up 15,712 according to unadjusted data.

The surprising surge in entitlements follows a series of gradual steps towards normal payroll slips. A year ago, the country saw nearly 1.5 million new claims per week due to ongoing government-mandated factory closures to contain the Covid-19 pandemic.

Employment has continued to improve as vaccinations progressed and cases, hospitalizations and deaths have fallen dramatically.

Current claims, which were a week behind the headline, were little changed at 3.52 million. A year ago it was just under 18 million. The four-week moving average of permanent claims fell by 55,000 to just over 3.6 million, the lowest level since March 21, 2020.

Federal Reserve Chairman Jerome Powell pointed out the difficulty of bringing workers back to fill the record 9.3 million available jobs.

“Factors related to the pandemic such as care needs, ongoing fears of the virus and unemployment insurance payments appear to be weighing on employment growth,” Powell said Wednesday at a press conference following this week’s central bank meeting. “These factors should subside in the coming months as vaccinations increase, leading to faster employment gains.”

The total number of beneficiaries declined, dropping to 14.83 million as of May 29, a decrease of more than half a million. This is mainly due to a sharp decline in the number of participants in pandemic-related programs and the increasing cessation of extended benefits granted during the crisis.

The Fed saw progress in the labor market and mounting inflationary pressures as it indicated the first wave of rate hikes could come sooner than expected. Two quarter-point increases are now shown for 2023.

A separate economic report on Thursday reflected the continued expansion and price pressures of the past few months.

The Philadelphia Fed industry survey came in at 30.7, higher than the expected 30.

The rise in employment and the prices paid helped keep the index high, despite being one point lower than it was in May. The gauge measures the difference between companies that report expansion and those that see contraction.

The index of prices paid rose to 80.7, the highest level since June 1979. The index of prices received rose by 9 points to 49.7, the highest level since October 1980. Only 2% of the companies surveyed reported lower prices.

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