U.S. Jobless Claims Unexpectedly Jump to Highest in Three Months

Applications for U.S. state unemployment benefits unexpectedly jumped to the highest level in three months, suggesting the labor market’s recovery is faltering amid the surge in Covid-19 cases and widening business restrictions.

Initial jobless claims in regular state programs rose by 23,000 to 885,000 in the week ended Dec. 12, Labor Department data showed Thursday. On an unadjusted basis, the figure fell by about 21,000.

Continuing claims for state programs declined by 273,000 to 5.51 million in the week ended Dec. 5. That figure roughly approximates the number of people receiving state unemployment benefits, but doesn’t include the millions of people who have already exhausted those benefits or are receiving assistance through federal pandemic jobless aid programs.

A Bloomberg survey of economists had called for 818,000 initial state claims and 5.7 million continuing claims on an adjusted basis.

The increase in initial claims reflects rising filings in California and Illinois, two states where governments have imposed particularly restrictive lockdowns in the wake of the latest Covid-19 surge. That, paired with cooler weather, has led to additional job losses and growing risks for the economy in the months before widespread vaccine distribution.

“Clearly the rise in claims is a troubling sign for the labor market,” even though seasonal distortions can make the figures more volatile at this time of year, said Michelle Meyer, head of U.S. economics at Bank of America Corp. “There’s a variety of indications that when you put the pieces of the puzzle together shows a weakening in the labor market in December.”