New US jobless claims rise to 861,000

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First-time claims for unemployment benefits rose to 861,000 last week, the highest level in four weeks, in the latest setback to the US labour market’s recovery from a winter Covid-19 surge.

The number of jobless claims filed for regular state programmes increased by 13,000 in the week ending February 13, up from 848,000 the previous week, the US labour department said on Thursday. It was the second consecutive week that applications rose. Economists had expected a small decline to 765,000.

California, Illinois and Ohio were among the states reporting the biggest increases in jobless claims.

The report also showed a rise of 174,247 in claims for federal pandemic unemployment assistance — which includes gig workers and the self-employed — to 516,299.

“The jobless claims data continue to paint a bleak labour market picture with 1.38m new claims for jobless benefits last week,” said Lydia Boussour, economist at Oxford Economics.

The S&P 500 opened 0.8 per cent lower at the start of trading on Thursday. Treasury yields were higher, with the yield on the US 10-year at 1.314 per cent. Yields rise as prices fall.

More than 18m Americans are seeking jobless benefits 11 months after the pandemic began, even as the government pushes ahead with its vaccine rollout in the hope of turning the page on the crisis. The were 6.6m job openings in the US at the end of last year, according to the labour department’s Job Openings and Labor Turnover Survey.

US president Joe Biden is urging Congress to adopt his $1.9tn stimulus plan, saying the economy would come “roaring back” if the aid were approved. One-time stimulus payments made in December, part of the $900bn relief package approved late last year, helped push retail sales up by the most in seven months in January.

Some Republicans on Capitol Hill remain resistant to the idea of such a large bill, and some economists, including economist Larry Summers, have flagged concerns about unhealthy jumps in inflation because of Biden’s stimulus.

Still, Federal Reserve officials think the threat posed by sluggish inflation is greater than the danger of rapidly rising prices and expect any uptick to be transitory. Fed chair Jay Powell has repeatedly stressed the importance of accommodative monetary policy to support the labour market.

“All of these pandemic benefits are set to begin phasing out on March 14” unless Congress acted to extend aid, said Andrew Stettner, senior fellow at the Century Foundation, a think-tank.

“With many workers enduring three to six-week delays (or longer) after the tardy enactment of the last stimulus package, there is no reason for Congress to risk more interruptions by waiting until the last minute to act.”

US employment remains almost 10m below its pre-pandemic levels. Fed officials view the economy as being far from its goals and have cautioned that the path ahead remained “highly uncertain, with the pandemic continuing to pose considerable risks to the outlook”. 

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