Jobless claims up for first time in months as COVID-19 spreads

The number of Americans applying for jobless aid is increasing, marking the first rise in months, as the coronavirus spreads across the nation.

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Some 1.4 million Americans applied for unemployment benefits in the week ended July 18, adjusting for seasonal variations, the Labor Department said Thursday. It's an increase from the prior week, when 1.3 million applied. 

Another 975,000 people requested Pandemic Unemployment Assistance, a new federal program for self-employed and gig workers. That figure increased by 20,000 from the previous week.

This marks the 17th week in a row that total jobless claims have been above 2 million. But claims for regular unemployment had been dropping since the last week of March, when they peaked a 6.6 million, until this past week's increase to 1.4 million from 1.3 million.

“The 15 consecutive weeks of declines in U.S. initial claims from record high levels is over,” Jennifer Lee, senior economist at BMO Capital Markets Economics, wrote in a note. “But given that the resurgence in the number of COVID-19 cases around parts of the country has led to a reversal in restrictions, this was expected.”

The biggest jumps in unemployment applications were in Florida, Georgia, California, Washington and Indiana, states that have seen sharp increases in the number of COVID-19 cases.

“The risk from repeated business closures is that  temporary job losses will become permanent. This could result in an even slower pace of recovery,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.

The total number of people receiving unemployment benefits through all state and federal programs dipped slightly, to 31.8 million, in the first week of July. That represents about 1 in 5 people in the workforce.

The latest string of layoffs is occurring just before a temporary $600 weekly federal aid payment for the jobless is set to expire at the end of this week. Members of Congress are negotiating another aid package that might extend that benefit, although likely at a lower level of payment.

The Associated Press contributed reporting.