Unemployment benefit claims in the US fall unexpectedly, remain high

Photographer: Luke Sharrett

US unemployment benefit claims have unexpectedly fallen to a one-month low, although recent increases in coronavirus cases and business closures threaten to continue dismissals increased to early 2021.

Initial unemployment claims in mainstream state programs fell by 19,000 to 787,000 in the week ending Dec. 26, according to a report by the Labor Department on Thursday. That was less than the average estimate of 835,000 in a Bloomberg poll of economists. The numbers are often volatile around holidays and last week including Christmas. Without adjustments, claims decreased by 31,736.

The persistent claims for state programs, which roughly correlate with the total number of people receiving unemployment benefits, also declined to 5.22 million in the week ending December 19. Economists predicted an increase to 5.37 million.

To underscore the damage from the pandemic to the labor market at the end of 2020, claims for benefits average 1.45 million per week this year, compared to about 220,000 in 2019.

The surprising decline in claims is a welcome sign, although levels remain high as the economic impact of the coronavirus continues to reverberate. While the The stimulus package recently signed into law aims to cushion the blow of further shutdowns and closures, funds may take time to reach consumers and without a widely available vaccine this is only a temporary measure.

What Bloomberg Economics Says

“The lack of a clearer jump in new layoffs in response to wider activity restrictions in some areas is reassuring. Nevertheless, the rate is still high and long-term unemployment is the main problem, underlining the importance of recent tax relief. “

– Andrew Husby, economist

For the full note, click here

The S&P 500 fell during early trading, while yields on 10-year Treasuries and the dollar changed little.

Illinois refusal

Illinois, which reported a drop of more than 28,500 cases from the previous week, was responsible for the lion’s share of the overall decline in unadjusted claims. Pennsylvania, Georgia and Texas also recorded significant declines in the number of registrations. New York and California, among states with more pandemic-related restrictions, reported increases in jobless claims.

Still, an increase in job applications for unemployment in the first half of December underscores economists’ expectations for a worsening winter labor market as colder weather forces restaurants and retailers to close or cut hours, while an increase in Covid-19 cases give rise to stricter measures. in different states.

The December jobs report, to be released next week, is expected to be on the weaker side. Economists predict an increase of about 70,000 jobs, the least since April, when payrolls fell. Several analysts predict that the workforce has shrunk.

In addition to regular state claims, more than 308,000 initial applications were filed last week under the Pandemic Unemployment Assistance program, which provides funds to those who do not qualify for the state programs, such as gig workers. In total, 8.46 million weeks of benefits were claimed for that program in the period ended December 12.

There were also a total of 4.77 million weeks worth of claims in the Pandemic Emergency Unemployment Compensation, a separate program that provides additional weeks of benefits to Americans who have exhausted the regular state program.

– With the help of Chris Middleton and Sophie Caronello

(Adds comment from Bloomberg Economics)