Jobless claims rise for third straight week after 6.2M lose federal benefits

New applications for jobless benefits rose for the third consecutive week after the expiration of federal pandemic unemployment aid earlier this month, according to data released Thursday by the Labor Department.

Seasonally adjusted initial claims for unemployment insurance totaled 362,000 in the week ending Sept. 25, a gain of 11,000 applications from the previous week’s total of 351,000.

Claims fell slightly without seasonal adjustments, declining to 298,255 before the Labor Department factored in an expected decline of 18,940 applications.

The persistent rise of jobless claims, which are volatile and subject to state processing errors, over September could signal lingering trouble for the labor market following the start of the delta variant surge in late July.

The steep increase in COVID-19 cases driven by the variant walloped the labor market and consumer confidence in August. Employment growth fell from a gain of more than 1 million new jobs in July to just 235,000 last month, with sectors hit hardest by the onset of the pandemic seeing almost no improvement.

Policymakers were hopeful that the labor market would be able to quickly absorb the nearly 11 million Americans who lost federal unemployment benefits when they lapsed Sept. 6.

The number of Americans on some form of jobless aid plummeted from 11.2 million during the first week of September to roughly 5 million in the week ending Sept. 11, a decline of 6.2 million.

The drop was almost entirely driven by the expiration of Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, two pandemic jobless aid programs, while 277,000 more Americans enrolled in state jobless aid programs.

But despite a record level of job openings, the labor market has not shown the swift improvement expected by some, but not all, economists.

The September jobs report, set to be released Oct. 8, is expected to give a clearer view of the potential impact of COVID-19 on the labor market.