New claims for state unemployment remain stubbornly high as the labor market struggles to regain momentum after the winter surge in coronavirus cases.
A total of 862,000 workers filed initial claims for state unemployment benefits last week, roughly the same number as the revised total for the week before, the Labor Department said Thursday. On a seasonally adjusted basis, the total was 861,000, an increase of 13,000.
After initial claims hit recent highs from late December to mid-January, economists had expected a steady downward trend. The latest report amounted to fresh evidence that the economic recovery’s momentum has stalled.
“We’re going in the wrong direction,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “It’s hard to get away from the fact that week after week we keep hoping for better and this is like a sucker punch.”
Particularly worrying was the rise in claims for Pandemic Unemployment Assistance, an emergency federal program for freelancers, part-time workers and others normally ineligible for state jobless benefits. About 516,000 claims were filed under the program, a jump of 174,000 from the previous week.
The increase largely reflected a spike in claims in Ohio, in part because of processing delays after the program was extended in federal relief legislation in December.
The Ohio Department of Job and Family Services said on Feb. 8 that “weekend system upgrades” had made the program available to more than 130,000 Ohioans “who have been waiting to receive these benefits” since December and permitted new applications.
Tom Betti, a spokesman for the Ohio Department of Job and Family Services, said the sharp rise could also be a result of fraud. “The steep increases we are seeing recently are a strong indicator that criminals are targeting not only P.U.A., but also the traditional unemployment program in Ohio,” he said in an email.
Ohio’s particulars aside, the latest figures offered little reason for optimism.
“It’s a bad report,” said Gregory Daco, chief U.S. economist at Oxford Economics. “It’s not a horrendous report, but by no means, even if you adjust for some of the weekly volatility, is it a good report.”
The weak numbers arrived as Congress continued work on a $1.9 trillion relief package proposed by President Biden. The House could vote on the legislation before the end of the month.
Adding to the urgency is the expiration of supplemental unemployment benefits in mid-March, which could lead to another round of uncertainty for millions who are still jobless. The Biden proposal would extend them through September.
Economists say the economic crisis has probably peaked, even if the pandemic continues to frustrate a recovery. The lasting damage to the labor market is uncertain, but could become clearer in the coming months.
Unemployment claims “really have been at an elevated level for a long time,” Ms. Swonk said. “What’s going to be key going forward is do they plummet at some point in time or are there some longer-term issues?”
Despite the challenges in the job market, there have been some positive signs for the economy in recent days. Retail sales surged 5.3 percent in January, a bigger gain than expected, though they were most likely powered by the latest round of stimulus checks and could dip again in February.
AnnElizabeth Konkel, an economist for the career site Indeed, said retail job postings on Indeed were up 2.6 percent from February 2020. Over all, job postings on the site are up 3.9 percent.
“We’re making progress, but there’s definitely still a ways to go,” Ms. Konkel said. “What needs to happen is they need to be up and elevated for a while to pull all of those people back into the labor market.”
But the economy is still hobbled. The Labor Department’s employment report for January showed a gain of just 49,000 jobs. Of the 22 million jobs that disappeared early in the pandemic, roughly 10 million remain lost. And the leisure and hospitality industries remain severely depressed.