The surprising jump in new jobless claims filings to their highest level since mid-September suggests a weakening labor market that could drag the economy into the first quarter.

Initial state unemployment benefit entitlements rose to 853,000, and were up 137,000 for the week ended December 5 from the previous week. This was the largest weekly increase since the peak of the economic shutdown in March. According to the Dow Jones, economists had expected 730,000 claims. They note that the Thanksgiving holiday season could bias either week, but the trend is clearly negative.

The state’s ongoing claims rose 230,000 to 5.76 million, the first increase since August.

“It looks like unemployment losses for the economy are starting to pile up. It’s not going to be a good month,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “You start the first week of the month on a bad grade and things are likely to go downhill from here. Lockdowns appear to be tightening. For projections expecting a negative economy, this is closer to reality in the first Quarter. “

The improvement in the labor market is showing signs of slowing down. The wage and salary increase of 245,000 in November was around 200,000 below expectations and well below the increase of 610,000 jobs in October.

“The seasonal factors show that the first week of December is always a disaster with lots of layoffs in the winter. This is traditionally the start of winter when you are manual workers and work outside of work,” Rupkey said. He found that the data showed a larger jump from 228,982 to 947,500, with no seasonal adjustments. “There is some catching up to do here, but the sky looks like they’re going to darken as some states are off-limits, particularly California which is 10% of the population. It’s going to get worse.”

According to CNBC / Moody’s Analytics Rapid Update, economists expect average GDP growth of 3% in the first quarter, after a forecast growth rate of 3.8% in fourth quarter GDP. Some economists expect a flat quarter for growth, and JPMorgan has announced a decline in GDP in the first quarter.

Rupkey said he expected the economy to pick up again after vaccines became widespread. “That’s a story from the second quarter or late first quarter,” he said.

Unemployment claims data have been viewed by economists as a steady early warning signal for the labor market as claims reflect actual layoffs. However, during the pandemic, the data was difficult to read and needs to be considered alongside the number of workers using benefits under special federal programs.

“We believe this recent slowdown in data is likely to reflect the deterioration in the job market related to virus-related developments. Other factors could also play a role and the data may be noisy over the holiday season,” noted JPMorgan economists.

The majority of workers receiving benefits are covered by special pandemic programs funded by Congress and scheduled to expire by the end of the year. The programs cover gig workers and individuals who may be deprived of other benefits.

The Labor Department said that for the week ended November 21, the total number of continued claims in all programs was 19 million, down from 1.1 million from the previous week.

In the week ended December 5, 427,609 people signed up for pandemic unemployment assistance, an increase of 139,375 from the previous week.

“Part of that is catching up, but the trend is in the wrong direction,” said Diane Swonk, chief economist at Grant Thornton, of the weekly increase. She said approximately 13 million people are covered by the programs that are about to expire.

Congress has been vacillating over more incentives since the summer and is now working to reach an agreement on a plan by next week. “You need suggestions now. This is a slap in the face. I knew it was going to be bad, but that’s worse than we expected,” said Swonk.

She said the December layoffs are likely to result in snowballs and the economy is expected to show flat or negative growth in the first quarter.

“No question about it, we’ll end [December] on a weak note. What we don’t know is how the spending will hold up. This is a wake up call, “she said.” Congress has turned a deaf ear to the cries of the unemployed who cannot support their families. The choir gets louder. “