The number of American residents applying for unemployment benefits rose to 744,000 last week amid the coronavirus pandemic, signalling the continued effects of the health crisis on the economy.
The situation is growing worse despite the increasing number of people getting the coronavirus vaccine, increased employer confidence, and assistance of the government towards the economy.
On Thursday, the Labor Department said the number of applications for unemployment benefits rose by 16,000 from 728,000 just one week later. While the number of job losses has dropped significantly since the beginning of the pandemic, they remain relatively high compared to previous years.
Before the coronavirus, the highest number of applications were only up to 220,000 per week. But this time, the week from March 20 to March 27 saw more than 3.7 million getting their unemployment benefits from the state. This goes up to a total of 18.2 million if including the supplemental federal programs.
Experts are closely observing the flow of jobless claims for signals to where the job market is heading towards. Historically, a decrease in the number of applications for unemployment benefits is considered a sign the economy is recovering.
However, the reliability of this mindset largely changed during the pandemic. There were more than the revealed number of job cuts due to a backlog of applications. And officials suspect some residents are committing fraud that undermines the actual statistics.
Authorities believe that despite the rising number of jobless applications, the state of the economy is slowly getting better. Employers added 916,000 jobs in March, the highest number since August. Additionally, the unemployment rate dropped from 6.2% to 6%.
The International Monetary Fund forecast the country’s economy will grow 6.4% this year. It would be the fastest rate of increase since 1984. It would also be the strongest among the world’s wealthiest countries, the North Bay Business Journal reported.
“Jobless claims may bounce around week to week as the recovery takes hold, but we expect they will start to decline more consistently as the economy gains momentum. We expect the stellar March jobs report to be the first of many and look for a hiring boom in the spring and summer months,” Oxford Economics’ Nancy Vanden Houten and Gregory Daco said.