The number of Americans seeking unemployment benefits fell last week, but remained significantly high, suggesting the labour market was stalling as the country battles a resurgence in new Covid-19 cases that is threatening a budding economic recovery.
Initial claims for state unemployment benefits totalled a seasonally adjusted 1.186 million for the week ended August 1st, compared to 1.435 million in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 1.415 million applications in the latest week.
Coronavirus cases soared across the country last month, forcing authorities in some of the hard-hit areas in the West and South to either shut down businesses again or pause reopenings, sending workers back home again. Though infections have eased to about 5 per cent nationally, they jumped last week in Oklahoma, Montana, Missouri and 17 other states.
The public health crisis is hurting demand for goods and services, broadening layoffs to sectors of the economy that were not initially impacted when non-essential businesses like restaurants and bars were shuttered in mid-March to slow the spread of the respiratory illness. Businesses are also cautious about hiring.
Reports this week showed a sharp step-down in private payrolls in July. Measures of employment at manufacturing and services industries contracted further last month.
Claims peaked at a record 6.867 million in late March. Some economists expect claims to fall in the coming weeks following the end of a $600 weekly unemployment benefits supplement last Friday. Industry groups said the supplement was encouraging furloughed and unemployed workers not to return to their jobs.
Other economists, however, expected claims to remain elevated because of weak demand and the expiration of the government’s Paycheck Protection Program that gave businesses loans that can be partially forgiven if used for employee pay.
Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid totalled 16.107 million in the week ending July 25th, from 16.951 million in the prior week.
The claims report has no bearing on July’s employment report, which is scheduled for release on Friday, as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls tally and unemployment rate.
According to a Reuters survey of economists, non-farm payrolls likely increased by 1.6 million in July, down sharply from the record 4.8 million jobs created in June. The jobless rate is forecast to fall to 10.5 per cent from 11.1 per cent in June. – Reuters
