Initial unemployment claims unexpectedly rose last week to end a six-week streak of improvements, even as economic activity ramped further and reopenings broadened out.
But in the coming weeks, a phase-out of enhanced unemployment benefits across many states may decrease the total number of claimants.
The Department of Labor released its weekly report on new jobless claims on 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 June 12: 412,000 vs. 360,000 expected and a revised 375,000 during prior week
Continuing claims, week ended June 5: 3.518 million vs. 3.425 million expected and a revised 3.517 million during prior week
New filings broke back above the psychologically important 400,000 level for the first time since mid-May. Even with the increase, the four-week moving average for new jobless claims decreased by 8,000 to 395,000, given the drop in new claims over the past several weeks.
Continuing jobless claims for regular state programs, reported on a one-week lag, also unexpectedly increased, but have still come down sharply from the more than 5 million reported each week as recently as early January.
Importantly, this week's jobless claims data reflect the last survey period during which full federal pandemic-era unemployment benefits were in place across all U.S. states. On June 12, Alaska, Iowa, Missouri and Mississippi became the first states to significantly reduce or fully slash enhanced federal unemployment benefits ahead of their official September expiration date. The move would affect claims for hundreds of thousands of individuals.
Officials from these and the about two dozen states that have opted for this early phase-out have done so with the hope of incentivizing workers to rejoin the labor force, with social distancing standards having eased across the country and job openings at record highs amid widely cited labor shortages. The benefits set to be reduced or eliminated include the supplemental $300 per week in federal unemployment insurance, Pandemic Unemployment Assistance (PUA) for gig workers and Pandemic Emergency Unemployment Compensation (PEUC) for the longer-term unemployed.
Altogether, the total number of individuals claiming unemployment benefits across all programs was 14.8 million for the week ended May 29, the most recent date for which data is available. This was down by more than half a million from the previous week, with the pace of declines accelerating markedly from the prior week. The majority of these comprised workers claiming benefits through the PUA and PEUC, which totaled 11.3 million.
Many economists have suggested that the ongoing labor supply challenges are due to a variety of issues, including but not limited to enhanced unemployment benefits. Others have cited a combination of concerns, including lingering worries about contracting COVID-19 and finding childcare, as adding to the strain for workers.
"Most industries are reporting acute labor shortages, but that could even out by fall as the pandemic-era unemployment benefits are phased out and schools reopen allowing parents to return to work," Anu Gaggar, senior global investment analyst for Commonwealth Financial Network, said in an email.
The increase in new filings last week was consolidated across just a few states, including Pennsylvania, where claims rose by nearly 22,000 on an unadjusted basis, and California, where claims rose by about 15,700. About half of U.S. states still posted declines in new claims last week, albeit by smaller margins.
Some states continued to post elevated insured unemployment rates, with the proportion of total claimants to the state's overall population coming in well above the national average. Nevada's insured unemployment rate came in at 4.6% for the week ended May 29, which has come down precipitously from the state's pandemic-era high of more than 26% last year, but has held stubbornly above the national average of 2.5%
Rhode Island and Alaska rounded out the top three state with the highest insured unemployment rates at 4.5% and 3.9%, respectively.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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