Data suggest new layoffs are being offset by hiring and employers recalling workers, though at a slower pace than a few weeks ago.
Photo: saul loeb/Agence France-Presse/Getty ImagesFilings for weekly unemployment benefits rose for the first time in nearly four months as some states rolled back reopenings because of the coronavirus pandemic, a sign the jobs recovery could be faltering.
Initial unemployment claims rose by a seasonally adjusted 109,000 to 1.4 million for the week ended July 18, the Labor Department said Thursday, halting what had been a steady descent from a peak of 6.9 million in late March, when the pandemic and business closures shut down parts of the U.S. economy.
The increase followed a period where claims had settled around 1.3 million a week, well above the pre-pandemic record of 695,000 in 1982.
The data also show that unemployment rolls have shrunk in recent weeks. Taken together, claims and benefits totals suggest new layoffs are being offset by hiring and employers recalling workers, though at a slower pace than a few weeks ago.
“The reopening across the country has been very bumpy,” said Michelle Holder, an economist at John Jay College in New York, before Thursday’s data. “I think unemployment applications are going to be sticky at this level because many states are seeing a reassertion of the virus.”
Last week’s increase in applications came after several states imposed new restrictions on businesses such as bars and restaurants when coronavirus cases rose.
The number of people receiving benefits through regular state programs, which cover the majority of workers, decreased by 1.1 million to 16.2 million for the week ended July 11. The decline extends the recent trend, with the number receiving benefits the lowest reading since the week ended April 11. Those so-called continuing claims are reported with a week lag.
Employers added a combined 7.5 million jobs in May and June after shedding 21 million jobs in March and April, separate Labor Department data showed.
On an unadjusted basis, the level of claims was mixed across states last week, falling in some states where virus cases have risen, including in Florida and Texas, and rising in others, including California and Louisiana.
The elevated level of claims indicate many workers are being laid off, perhaps for a second time, and that parents who want to work are unable to access child care, Ms. Holder said.
California is among the states that imposed new restrictions to deal with a surge in cases of the new coronavirus. The latest restrictions caused Jessica Jenkins, a 30-year-old stylist, to lose her job last week for the second time this year.
Ms. Jenkins, an independent contractor who rents a booth at Bloom Salon in downtown Napa, had been back at work for five weeks, following a monthslong shutdown that began in mid-March. Being out of work again “is definitely uncomfortable,” Ms. Jenkins said. “I don’t know how long [this shutdown] is going to be or how much it’s going to affect my business.”
Ms. Jenkins said coronavirus precautions, which required that stylists space out customers and disinfect chairs and other equipment after every use, meant before the second shutdown she was working longer hours and making about half the money she was before the pandemic.
The self-employed, gig workers, parents who can’t find child care and others who qualify under special pandemic programs are able to tap unemployment benefits under a law passed in March, even if they don’t qualify under regular state programs.
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Last week, 975,000 workers applied for benefits through the new Pandemic Unemployment Assistance program, a modest increase from the prior week. But the number receiving payments through the program fell by nearly 800,000 in the July 4 week to 13.2 million, according to the latest available data, which isn’t adjusted for seasonality. Economists caution that accounting for the new program is inconsistent across states.
A decreasing number of Americans receiving benefits indicates that recalls and new hiring are outpacing fresh layoffs—suggesting U.S. employers are likely to add jobs to total payrolls for the third straight month in July.
Greystone Lodge on the River in Gatlinburg, Tenn., temporarily shut its doors on April 1, but didn’t lay off employees. General Manager Jackie Leatherwood said the 241-room hotel wanted to be loyal to longtime employees and avoid a scramble for staff before its busy summer season.
Greystone reopened on May 1, and since hired four additional employees, including a front-desk clerk and a laundry attendant, and has several openings, Ms. Leatherwood said. Business picked up in June as visitors returned to the nearby Great Smoky Mountains National Park. She said July so far “looks really good.”
Other businesses are facing renewed challenges with a rising number of virus cases.
The Midnight Cowboy cocktail bar in Austin, Texas, had to close its doors and put five employees back on furlough when the state ordered bars to shut down for a second time in late June. Another four employees have been on furlough since mid-March. Bill Norris, co-owner at the bar, said that during the weeks it was open, revenue was about half of what it was during a comparable period last year.
“We were scraping by,” Mr. Norris said. He said he expects the bar will eventually reopen, when state rules allow it to and when customers are ready to come back. But he said he worries about furloughed employees.
“To know that you can’t support people who’ve been the heartbeat of your business is crushing,” Mr. Norris said.
The tens of millions of workers covered by a range of unemployment insurance programs face the prospect of a significant reduction in benefits at the end of this month, when a $600 weekly benefits enhancement is set to expire. Lawmakers are negotiating over whether and how to extend those benefits, with the possibility of passing a temporary extension while talks continue over a longer term solution. State programs alone pay about $350 a week, on average.
The federal government paid $18.3 billion in enhanced compensation for the week ended July 18, the Labor Department said. That is the equivalent of 30.5 million $600 payments, though some of the total amount could reflect back payments.
University of Michigan labor economist Don Grimes said if the amount offered under unemployment insurance is reduced, the number of Americans receiving benefits is likely to decline, but not necessarily the number of new applications.
“The $600 additional weekly payment may have encouraged people to stay on unemployment,” he said. “But if someone loses their job they will file for unemployment benefits whether the value of those benefits is $300 a week or $900 a week.”
—Kim Mackrael and Justin Baer contributed to this article.
Write to Eric Morath at eric.morath@wsj.com
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