The pace of new US jobless claims accelerated last week to the highest level since August, as the labour market continued to struggle amid a relentless surge in coronavirus cases and deaths.
There were a seasonally adjusted 965,000 initial applications for unemployment aid last week, higher than the 784,000 claims during the prior week, according to the Department of Labor on Thursday. The figures marked the first increase in new claims in a month. Economists had forecast that 795,000 claims were filed last week.
Continuing claims — the number of Americans actively collecting state jobless benefits — came in at 5.3m on January 2, compared with 5.1m one week earlier. Continuing claims have fallen from 10.6m at the end of September but remain above pre-pandemic levels of about 1.7m.
The insured unemployment rate, considered an alternative measure of joblessness, rose from 3.5 per cent to 3.7 per cent.
New claims through the federal Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits, advanced to 284,470 last week, from 161,159 on an unadjusted basis.
The US labour market has sputtered in recent months, resulting in 140,000 jobs lost in December amid a sharp rise in coronavirus cases and stricter curbs placed on businesses and social activity. Fatalities in the US are hovering at record highs, while parts of the US such as California — the nation’s largest economy — are facing elevated levels of infections and hospitalisations.
The Federal Reserve said a growing number of its districts reported weaker employment levels over the past month. While employment still rose in a majority of regions, the recovery was slow and “remained incomplete”, according to the central bank’s Beige Book report published on Wednesday.
Some employers said they were dealing with staffing shortages and had trouble finding qualified workers for entry-level and on-site positions — challenges that were exacerbated by the surge in coronavirus infections.
Esther George, president of the Kansas City Federal Reserve, predicted a “snapback” for the US economy once Covid-19 immunisations are completed but added that any significant delays in the vaccine rollout would pose one of the greatest risks to the outlook. “It is difficult to imagine a sustained and robust recovery until the virus no longer interferes with day to day decision making,” she said this week.
All state and federal programmes had a combined 18.4m people claiming benefits as of December 26, down from 19.2m the week before, according to unadjusted figures that are reported on a two-week delay.
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