The numbers: The number of Americans who applied for jobless benefits soared in early January to a five-month high of nearly 1 million as more workers lost their jobs due to coronavirus-induced business closures and restrictions.

Initial jobless claims filed traditionally through the states leaped by 181,000 to a seasonally adjusted 965,000 in the seven days ended Jan. 9, the government said Thursday. It was the highest level since August.

Economists surveyed by Dow Jones and the Wall Street Journal had forecast initial jobless claims to total 800,000.

Another 284,470 applications were filed through a temporary federal-relief program.

Read: When will jobless Americans get their extra $300 in benefits

Adding up new state and federal claims, the government received 1.44 million applications last week, based on actual or unadjusted figures. Combined claims have yet to drop below 1 million a week since last spring.

While jobless claims have correctly reflected the rise and decline in unemployment during the pandemic, a government watchdog agency also found the number of distinct individuals applying for or collecting benefits has been inflated by fraud, double counting and other problems.

The Bureau of Labor Statistics is taking steps to improve the data, but for now the claims report is not considered entirely accurate. Economists say to pay attention to the direction of claims instead of the totals.

Read: Jobless claims inflated, GAO finds

Also: Why the inaccurate jobless claims report is still useful to investors

What happened: The record rise in coronavirus cases is the chief cause of recent rise in unemployment, but companies also lay off temporary workers hired for the holidays. It appears that holiday hiring was much smaller in 2020, however, because of all the disruptions caused by the pandemic.

Applications for jobless benefits rose the most last week in the states of Illinois and Florida, accounting for the bulk of the increase. They also rose in Kansas and California.

New jobless claims have backtracked in the past few months. They had fallen to a pandemic low of 711,000 in November before a record increase in coronavirus cases forced more businesses to close or cut back hours. That led the the first decline in employment in December since the early stages of the pandemic.

The number of people already collecting state jobless benefits, meanwhile, increased by 199,000 to a seasonally adjusted 5.07 million.

Yet millions of people who have run out of state benefits have simply shifted to the temporary federal program because they can’t find work. Continuing claims funded by the federal government totaled 4.2 million in the week ended Dec. 26, the latest data available.

Altogether, the number of people receiving benefits from eight separate state and federal programs was reported at an unadjusted 18.4 million as of Dec. 26. That was down 744,511 from the prior week and marked the lowest level since the onset of the pandemic last spring.

Those numbers are also under dispute, though. The government’s more comprehensive monthly jobs report indicated a far smaller 10.7 million people were unemployed at the end of December.

Economists say the true number of unemployed is probably in the middle.

Big picture: The biggest threat to the economy from the latest bout of the coronavirus is the damage it’s done to hiring and employment. Many jobs could be lost permanently if the pandemic lasts much longer.

The extra financial aid from Washington will help, but it can only do so much if Americans are too afraid to go out or government restrictions prevent them from doing so.

See: MarketWatch Coronavirus Recovery Tracker

Market reaction: The Dow Jones Industrial Average DJIA, -0.03% and S&P 500 SPX, +0.23% were set to open higher in Thursday trades.

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