The number of Americans filing new claims for unemployment benefits rose to a two-month high last week, a reminder that the labor market was far from being out of the woods as the nation confronts a resurgence in new COVID-19 infections.

Still, the weekly jobless claims report from the Labor Department on Thursday, showed more people are returning to work, a trend that bodes well for July's employment report. The Delta variant of the coronavirus is behind the latest outbreak, with states that have low vaccination rates worst affected.

"The rise in jobless claims this week tells us that the labor market's troubles are not completely behind us and the Delta variant may yet throw a monkey wrench into the economic recovery from the shortest recession in American history," said Christopher Rupkey, chief economist at FWDBONDS in New York.

Initial claims for state unemployment benefits increased 51,000 to a seasonally adjusted 419,000 for the week ended July 17, the highest level since mid-May. Data for the prior week was revised to show 8,000 more applications received than previously reported. Economists polled by Reuters had forecast 350,000 applications for the latest week.

There were large increases in filings in Kentucky, Michigan, Missouri and Texas. Some of these states have experienced a surge in new coronavirus cases.

Though economists do not expect large-scale business shutdowns similar to 2020, the latest wave of infections poses a risk to the economy. The National Bureau of Economic Research's business cycle dating committee declared on Monday that the pandemic recession, which started in February 2020, ended in April 2020.

Some of the rise in claims likely reflects difficulties smoothing the data for seasonal fluctuations following the upheaval from the pandemic. In normal years, layoffs are usually expected to decline in the second half of July. Before the pandemic, summer factory closures were the norm in early July, especially in the automobile industry.

(With input from agencies)