In the week ending July 17, the number of Americans filing for unemployment benefits increased by 51,000 from the previous week's upwardly revised level of 368,000, according to a report released by the department's Bureau of Labor Statistics.
The latest data came after initial jobless claims in previous week dropped to the lowest level since March 14, 2020, when it was 256,000, according to the report.
The four-week moving average, a method to iron out data volatility, edged up by 750 to 385,250.
The weekly jobless claims report was released as COVID-19 cases, hospitalizations and deaths went up drastically in recent weeks, with the highly contagious Delta variant spreading across the United States.
The latest report also showed that the number of people continuing to collect regular state unemployment benefits in the week ending July 10 decreased by 29,000 to 3.2 million. That number peaked in April and May last year, when it was over 20 million.
Meanwhile, the total number of people claiming benefits in all programs -- state and federal combined -- for the week ending July 3 also decreased by 1.26 million to 12.57 million, as the country continues to grapple with the fallout of the pandemic.
The noticeable decline came weeks after over 20 states, nearly all of which are Republican-led, announced plans to end the 300-U.S.-dollar weekly federal unemployment benefits in June or July, ahead of their expiration date of Sept. 6.
These states argued that federal supplement to unemployment benefits discouraged workers from returning to work and led to labor shortage.
At a virtual news conference in mid-June, Federal Reserve Chair Jerome Powell, however, cited federal supplements to unemployment insurance as a less important factor that seems likely to be "holding back labor supply."
Other key factors include: finding a new job, which is a process that takes longer as workers match their skills to what employers want; fear of returning to work, which should "diminish" as vaccinations move ahead; lingering childcare needs, according to Powell.