Weekly unemployment claims unexpectedly surged last week, rising above 800,000 as the labor market recovery stalled.
The Department of Labor released its weekly report on new jobless claims Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:
Initial jobless claims, week ended February 13: 861,000 vs. 773,000 expected and an upwardly revised 848,000 during prior week
Continuing claims, week ended February 6: 4.494 million vs. 4.425 million expected and an upwardly revised 4.558 million during prior week
At 861,000, new jobless claims posted a surprise back-to-back weekly increase to reach the highest level in one month. The prior week's new claims were also upwardly revised to 848,000, from the 793,000 reported previously.
The four week moving average for new claims ticked down slightly by 3,500 to 833,250, as claims steadied at an elevated level after a December and January surge. And new weekly claims remain multiples above their levels from before the pandemic, when claims were coming in at an average of just over 200,000 per week.
On a state-by-state basis, some populous states again reported large increases in new claims for the week ended February 13, contributing heavily to the overall rise. Illinois saw more than 33,000 new claims filed last week, on an unadjusted basis, while California estimated that 20,600 claims were filed. Others, however, saw notable decreases, including Texas with a drop of 12,400 unadjusted new claims, and Georgia with a drop of nearly 6,000.
The jump in overall new claims diverged considerably from consensus estimates, which had forecast back-to-back weeks of initial claims below 800,000. Falling COVID-19 case counts along with additional government stimulus have helped buoy consumer spending and were expected to catalyze faster improvements in the labor market. On Wednesday, new data showed that retail sales rose at the fastest pace in seven months in January, aided by additional unemployment benefits and direct checks to consumers. The increase in consumption and in hiring is expected to pick up as increasing vaccinations allow a greater number of businesses and services to resume.
"An improved near-term outlook for the pandemic, with new cases and hospitalizations both slowing, should be positive for leisure and hospitality," Nomura Chief Economist Lewis Alexander wrote in a recent note. "However, downside risks persist."
The March cliff for federal unemployment benefits remains one such concern, with the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs both scheduled to lapse in less than a month. More than 11.7 million Americans were claimants on either of these programs as of late January, comprising the majority of the 18.3 million Americans claiming benefits across all programs, Thursday's report showed. However, Democratic lawmakers have been pushing to pass another robust virus relief package before mid-March to avoid the expiration of benefits.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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