First-time applications for unemployment benefits fell slightly to 751,000 last week, raising fears that improvement in the US labour market is stalling as new coronavirus cases rise and fiscal support fades.
The small decline of 7,000 in weekly jobless claims made through regular state programmes was accompanied by an increase of 3,839 in claims for federal pandemic unemployment assistance, which captures a broader pool of workers.
Overall, 21.5m Americans are still receiving jobless benefits of some kind, eight months since the coronavirus crisis began in the US.
The data come amid concerns about a slowdown in the US labour market recovery, which were exacerbated by smaller than expected gains in private sector employment in October, according to the monthly report by ADP, the payroll processor.
“It looks like a second wave of lay-offs is hitting the economy, perhaps due to the rising count of virus cases, but it could also mean that many businesses are unable to reopen fully and facing bankruptcy, so they have to let their workers go,” said Chris Rupkey, chief financial economist at MUFG.
The US labour department will release monthly data on non-farm payroll employment on Friday. Economists expect that the US created roughly 600,000 jobs in October, the slowest pace since May, when the economy began to slowly bounce back from the pandemic shock. That would still leave 10m Americans out of work compared with the start of 2020.
Economists also predict that joblessness will decline from 7.9 per cent to 7.6 per cent, according to average forecasts.
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The jobless claims data on Thursday were released as Federal Reserve policymakers gathered for their second day of discussions at a regularly scheduled FOMC meeting, which is due to conclude in the afternoon.
Although the labour market recovery has outperformed the Fed’s expectations during the coronavirus emergency, officials are still concerned that the long crawl back from the pandemic could inflict lasting damage on many workers and households.
Fed officials have sounded the alarm on the need for additional fiscal stimulus, including help for the unemployed, but the White House and Congress have failed to strike any deal on a new rescue package. The initial $3tn in fiscal support measures passed early in the year included $600 per week payments to the unemployed, sustaining their income and spending. Those benefits lapsed at the end of July.
The Fed is unlikely to make any changes to its monetary policy this week, which is already extraordinarily loose. Interest rates are close to zero, and the Fed said it would not start raising them until it reached full employment and inflation reached its 2 per cent target and was “on track” to exceed that level for some time.
Source: Economy - ft.com
