Initial claims for unemployment insurance have changed little over the past week, despite other indicators that the labor market weakened in late 2020.
Weekly claims totaled 787,000 for the week ending Jan. 2, the Labor Department reported Thursday. That was less than the Dow Jones estimate of 815,000 and a slight drop from the upwardly revised total of 790,000 for the previous week.
The report also showed a drop of 126,000 in persistent claims, bringing the total to 5.07 million. Those who received benefits from all programs also declined, decreasing 420,000 to 19.2 million.
Claims remain well above pre-pandemic levels as a sustained rise in Covid-19 cases has caused economic constraints in states and municipalities across the country.
On Wednesday, ADP reported that private hires have been contracted for the first time since April, as companies lost 123,000 in December. That number showed that almost all layoffs were in large business and in the hospitality industry, as hotels, restaurants and bars have been particularly hard hit by the winter pandemic resurgence.
“A combination of Covid fears and state-imposed restrictions on services industry activities are putting pressure on businesses, and real relief is likely only when a sustained decline in pressure on hospitals emerges; that’s likely at the earliest a story at the end of February, ”wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The weekly claim figure appears one day ahead on the well-viewed nonfarm payroll report.
The Labor Department is expected to report Friday that the US economy has added just 50,000 jobs by the end of a tumultuous 2020, while the unemployment rate is expected to rise to 6.8%, according to Dow Jones estimates.
Despite the likelihood that the number of hires would slow as the year ended, the four-week moving average for claims continued to decline, dropping to 818,750 last week. However, the labor market remains in dire need, as the four-week average was 219,750 a year ago.
At the state level, Illinois reported by far the largest drop in claims at 62,765, according to unadjusted data. Multiple states posted gains of more than 10,000, including Colorado, Georgia, Kansas, Virginia and Texas.
Despite the decline in hires, the fourth quarter is expected to show significant growth.
The GDPNow activity tracker of the Atlanta Federal Reserve points to an 8.9% increase for gross domestic product amid rising consumption and investment.