US weekly jobless claims elevated as economy appears to stall

The number of Americans filing for initial unemployment benefits has levelled off near 1.4m, as Covid-19 outbreaks in parts of the US south and west stoke concerns that the labour market’s recovery could stall.

New jobless claims came in at a seasonally adjusted 1.42m last week, compared with 1.31m a week earlier, the US Department of Labor said on Thursday. Economists had forecast that claims would match the previous week’s unrevised figure of 1.3m.

It was the first time since early in the crisis that weekly applications for benefits have risen. The pace of first-time claims had gradually eased in each of the preceding 15 weeks since hitting a high of 6.9m in March. Weekly claims remain elevated, having hit a peak of 669,000 during the 2008-09 financial crisis.

New claims in the Pandemic Unemployment Assistance programme, which extended aid to the self-employed or other individuals who would not qualify for regular unemployment compensation, rose to 974,999 from 955,272 on an unadjusted basis.

11.1% Continuing jobless claims as a proportion of US workforce

Economists have said the spread of coronavirus outside early hotpots in the US north-east, and renewed curbs on some businesses in California, Texas and Florida, threatened to slow the nation’s recovery from economic turmoil caused by the pandemic.

Data on the jobs market and consumer spending had previously provided early signs of improvement. After a record loss of 20.5m payrolls in April, the US added a combined 7.3m jobs in May and June amid a surge in hiring as the economy gradually reopened. The US Census Bureau said last week that June retail sales were up 7.5 per cent versus the prior month, following a record jump of 18.2 per cent in May.

The number of Americans currently receiving jobless benefits dropped to 16.2m from 17.3m during the week that ended on July 11. Continuing claims were equivalent to 11.1 per cent of the workforce. This so-called insured unemployment rate, which was 11.8 per cent the week before, is considered an alternative measure of joblessness.

Continuing claims have fallen for seven weeks running, and are down from 20.3m in the first week of June and a peak of 24.9m in May.

Lawmakers in Washington are in talks over whether to maintain an additional $600 a week in unemployment benefits, which was included in the government’s $2.2tn stimulus bill in March. Donald Trump indicated this week that the next relief package will extend at least part of the supplemental jobless aid, saying employers are “having a hard time” rehiring workers.

The non-partisan Congressional Budget Office said if the extra $600 in weekly aid is stretched until the end of January, about five of every six recipients would receive more in benefits than they would expect to earn from working.