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WASHINGTON: The number of Americans filing new claims for unemployment benefits increased last week for the third straight week, which could raise concerns that the labor market was softening.

Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 362,000 for the week ended Sept. 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 335,000 applications for the latest week.

Claims have been rising, with economists blaming a range of factors including wild fires in California and Hurricane Ida, which struck the Gulf Coast in late August and caused record flooding in New York and New Jersey in early September.

The persistent increase also suggests a resurgence in COVID-19 infections, driven by the Delta variant of the coronavirus, could be impacting the labor market.

Claims, which have dropped from a record 6.149 million in early April 2020, remain well above their pre-pandemic levels.

US new home sales beat expectations; supply increases

With economic activity appearing to be picking up after being restrained by the latest coronavirus wave, claims are likely to decline in the weeks ahead. There are indications that infections are subsiding, though deaths remain high.

"Continued progress on this front should support demand for services," said Stephen Juneau, an economist at Bank of America Securities in New York. "We are seeing signs that travel demand is improving. Total card spending has increased."

The claims data is being watched for signs of how soon a shortage of workers will start easing after the expiration early this month of federal government-funded benefits, which were blamed by businesses and Republicans for keeping the unemployed at home. There were a record 10.9 million open jobs at the end of July. More than 8 million people are estimated to have lost all their pandemic benefits on Sept. 6.

"So far, evidence from the states that ended benefits early over the summer suggests that even with the end of unemployment benefits nationally, there is unlikely to be a sudden and large return to the labor force," said Veronica Clark, an economist at Citigroup in New York.

The economy created 235,000 jobs in August, the fewest in seven months. Lack of childcare, fears contracting the coronavirus and pandemic-related career changes have been blamed for the worker shortage.

A separate report from the Commerce Department on Thursday confirmed that economic growth accelerated in the second quarter, thanks to pandemic relief money from the government, which boosted consumer spending.

Gross domestic product increased at a 6.7% annualized rate, the department said in its third estimate of GDP growth for the April-June quarter. That was revised up from the 6.6% pace of expansion reported in August.

The economy grew at a 6.3% rate in the first quarter. Growth, however, looks to have slowed in the third quarter because of the Delta variant as well as shortages of raw materials, which have hurt motor vehicle sales and constrained home building and purchases.

Growth estimates for the third quarter are below a 5% rate.


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