New applications for unemployment insurance rose last week after reaching a new pandemic low, according to data released Thursday by the Labor Department.
In the week ending July 17, initial claims for jobless benefits rose to 419,000 from a revised total of 368,000 from the previous week, an increase of 51,000. New jobless claims had reached the lowest level since March 14, 2020, in the prior week, coming within 100,000 of pre-pandemic levels.
The increase in jobless claims comes after roughly half of all states pulled out of expanded unemployment insurance programs set to expire in September and three consecutive months of accelerating job gains. The number of Americans on unemployment aid also dropped sharply between the final week of June and the first week of July, declining by 1.2 million to roughly 12.6 million people.
Labor market experts and government watchdogs have both warned throughout the pandemic that weekly jobless claims data is vulnerable to processing errors, backlogs and other technical issues that could skew the picture of the job market.
Daniel Zhao, senior economist at Glassdoor, pinned the sharp jump in claims on "unusually large spikes" in Michigan, Kentucky and Texas, which could be revised next week.
"This may just be a fluke," Zhao tweeted.
The surprise jump in initial UI claims is on the back of unusually large spikes in a few states:— Daniel Zhao (@DanielBZhao) July 22, 2021
Michigan: 7,465 -> 20,548
Kentucky: 2,498 -> 11,396
Texas: 34,307 -> 44,253
Indicates that this may just be a fluke and we'll see claims revert in coming wks.#joblessclaims 2/
Jobless claims are still down considerably from the same week one year ago, when more than 32 million Americans were on some form of unemployment aid. While the recently inconsistent path of claims may not be a significant red flag, experts say it illustrates the obstacles facing the economy as it continues to thaw from the pandemic.
"While we expect labor market conditions to improve over the rest of 2021, the bump up in claims is a reminder that progress won’t follow a straight line," wrote Nancy Vanden Houten of Oxford Economics in a Thursday analysis.
Updated at 9:19 a.m.