Many Americans are currently filing for unemployment benefits, raising the rate for the third week in a row. This is a sign that the Delta variant is highly contagious and could be holding back the job market’s recovery.
The Labor Department said the claims unexpectedly jumped from 11,000 to 362,000 last week, despite most economists believing they would begin to cease. Additionally, for the first time in 7 weeks, the 4-week moving average for claims increased excessively to 340 thousand.
Requests had declined since January, when they drastically topped 900,000, to help the country’s economy slowly recover from last year’s shutdowns. However, they have been increasing again as the number of Delta variant infections increases.
In theory, applications are an indicator of layoffs but are currently higher than normal. Before the pandemic hit the United States and the radical quarantine process began, in March 2020, the number of applications was typically around 220,000 per week.
Most American employers have started ramping up hiring processes since about 22 million jobs were cut between March and April 2020, when we were experiencing the first Covid-19 outbreak, and the establishment of quarantine led to the economic stalemate. Since then, approximately 12 million jobs have been recovered during reopening the companies, and some others were in charge of extending the hours and people return to bars, restaurants, hotels, and other public spaces.
However, even though hiring has managed to reach an average of 585,000 jobs per month this year, in August, it dropped sharply to just 35,000, as the Delta variant has severely affected the recovery. Bars and restaurants, again, eliminated nearly 42,000 jobs in the previous month, which is recognized as the first drop this year. Economists expect hiring to rise to more than 560,000 this month. Next week, the Labor Department is releasing the September jobs report.
Contingent Macro Advisors said, in a research note, that some of the technical factors, recognized as seasonal adjustments and processing backlogs in California (where claims soared by nearly 18,000), were responsible for the week’s increase in filings previous. Contingent said: “Overall, the jump in claims in the last three weeks deserves a close look but is not yet alarming.”
In all, 2.8 million Americans were receiving some form of unemployment assistance the week of September 18, 18,000 fewer than the previous week. Earlier this month, the federal government stopped additional aid, including $ 300 a week in addition to traditional state benefits, that was intended to ease the economic impact of the pandemic.