New unemployment claims in Washington dipped slightly last week as a rebounding state economy continued to add more jobs.

But that encouraging news comes with a warning from the state’s economist: Thanks to surging COVID-19 cases, the state could see renewed layoffs and a slowdown in recent hiring.

“I’m not expecting a dramatic change, but one that could slow down the pace of job growth from where the state was the last two months,” said Paul Turek, state economist for the Employment Security Department.  

Washingtonians filed 5,357 new, or “initial,” claims for unemployment benefits last week, a 3.1% decrease from the prior week, the ESD reported Thursday. Nationally, new claims rose 1.1% over the prior week, to 353,000, the U.S. Labor Department reported Thursday.

The state’s job market continued to recover: In July, Washington added 22,700 jobs and the unemployment rate fell to 5.1%, from 5.2% in June, the ESD reported last week. The U.S. unemployment rate for July was 5.4%.

But those encouraging trends are likely to be affected by recent increases of COVID-19 cases from the highly infectious delta variant of the coronavirus, which has already prompted new government restrictions.

Advertising

Indeed, although initial claims remain dramatically lower than during the early months of the pandemic, their numbers have crept back up in recent weeks. The 4-week moving average for regular initial claims last week was 5,306, which was up nearly 4% from a week earlier and is 2.1% higher than it was at the same period in 2019, the ESD reported.

Turek said those trends might increase moderately if rising case counts result in renewed business restrictions and consumer anxieties that affect hiring. Already, some big employers have delayed plans to bring remote workers back to the office.

“This might, in turn, affect restaurants who might be relying on these workers who would go out to lunch,” Turek said. “There might be less business meetings and travel which could affect the transportation industry.”

“Consumers might also become more reluctant to travel and eat out and delay vacation plans, thereby affecting leisure and hospitality again,” Turek added

He also noted that because the July jobs report uses data from the beginning of the month, “the full impact of the variant” may not be apparent until next month.

That prospect comes as the state’s labor shortage, though perhaps not as severe as earlier this summer, also remains a concern.

Advertising

The state’s leisure and hospitality sector, which has struggled for months to hire enough workers, added 11,800 jobs in July, according to ESD data.

More on the Economy

More

Demand for workers remains elevated. Postings for new leisure and hospitality jobs, though down modestly from earlier this month, are again surging and were 32% higher than in January 2020, as of Aug. 20, according to data presented by Harvard University’s Economic Tracker. Overall job postings were up 16.8% in Washington.

Some employers have said the labor shortage has been exacerbated by the $300-a-week enhanced federal unemployment benefits, which expire after Labor Day.

In Washington state, the number of overall claims — new claims plus ongoing claims that people must file each week to receive benefits — dropped 3.6% to 275,558 last week.

New claims for federal pandemic extended benefits — for workers who have exhausted state unemployment benefits — climbed 25% last week from the prior week.

More on the COVID-19 pandemic

Advertising

Last week, the ESD paid benefits on 204,343 individual claims. That’s down 3.3% from the prior week and the lowest number since April 4, 2020. Because individuals can have multiple claims, the number of claims is often slightly higher than the number of individual claimants.

Since March 2020, more than 1.1 million Washingtonians have received more than $20.9 billion in jobless benefits, with about two-thirds of the money coming from the federal government.

By comparison, in each of the previous 10 years, the ESD’s annual payout averaged just over $1 billion, the ESD said.

This story has been updated to reflect the original date of the July jobs report, which was published by the ESD last week. An earlier version of the story said the report had been released this week, based on the date given on the ESD’s website.

This coverage is partially underwritten by Microsoft Philanthropies. The Seattle Times maintains editorial control over this and all its coverage.