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The number of Americans applying for unemployment benefits last week climbed unexpectedly back above one million, official figures show.
The U.S. Department of Labor said claims rose to 1.1 million, ahead of economists’ forecasts of 925,000.
The rise came when US President Donald Trump faced increased pressure over his handling of the health crisis.
Coronavirus infections continue to spread across the US, prompting local authorities to restrict businesses.
The number of people claiming unemployment benefits had fallen in the previous two weeks. Most recently, it dropped below one million to 971,000 for the first time since March in the week ending August 8,
But economists have warned that the recent improvement in jobs is at risk, as health care drives people to limit their activity and spending, even as it continues to rise.
“Today’s rise in initial unemployment will disappoint the market, especially after last week’s promise data,” said Richard Flynn, UK director at stockbroker Charles Schwab.
“While hard-hit industry workers came in July, the weak level remains unusual, and the impact of virus-related rolling shutdowns could continue to reverse some of those improvements.”
‘Unhealthy’
The US economy suffered from its sharpest economic contraction in more than 70 years of record holding in the period April-June, shrinking at an annual rate of 33%.
Although the unemployment rate fell from the 14.7% high in April when companies opened and activity resumed, the 10.2% rate recorded in July remains higher than every month during the financial crisis.
Analysis: No time to withdraw
By Michelle Fleury, American business correspondent
These data do not feel like the V-shaped recovery that President Trump and the Republicans are banking on.
With the number of Americans filing for unemployment after seven weeks of decline, the employment market is a reflection of the environments that have the largest economy in the world.
And yet at this important turning point, Congress is still divided over the next relief package that could help many Americans who lose their jobs when the U.S. shuts down to stop the spread of the coronavirus.
Republicans want a smaller package. They point to improvements in the economy: the S&P 500 hit a record high this week, retail sales rebounded again and house construction is strong.
Yet many people do not feel better. Thousands of businesses are still close. Unemployment is above 10%. And food insecurity is on the rise.
President Trump this month issued an executive order that provided $ 300 a week in additional unemployment benefits after a $ 600-a-week payment approved by Congress expired in July. But aid is limited and in some states it lasts only three weeks.
With the recovery not far off, most economists warn that now is not the time for the federal government to retreat.
More than 28 million people – nearly one-fifth of the U.S. workforce – gather in the week ending August 1.
“The number of individuals claiming benefits remains extraordinarily high – more than twice the height of the Great Recession – underscoring that the job market is a long way from being healthy,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
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Talks in Washington about further economic aid for people crashed this month without a deal.
The lack of agreement means that an additional $ 600 per week that Congress approved for unemployment benefits during the pandemic expired at the end of July.
Analysts have warned that the removal is likely to further hurt the U.S. economic recovery, which requires consumer spending.
Democrats have called for more than $ 3tn in further spending – a figure that Republicans have dismissed as too high.
The stand-off puts Mr. Trump, who is up for election again in November, in a potentially dangerous position.
While polls suggest voter approval for his handling of the economy remains relatively strong, Democrats accuse him of the crisis.
“Trump’s ignorance and incompetence have always endangered our country. COVID-19 was his biggest test – and he failed miserably,” Senator Elizabeth Warren said on Twitter. “America has the most COVID-19 deaths in the world and an economic collapse – and both crisis cases hit the Black and Brown families hardest.”
Mr. Trump has said he supports further support, and used his power to increase attempts at unemployment.
But his orders do not completely replace the $ 600 bonus and are not renewed anywhere, as the program would need support from local authorities.
