Claims for US unemployment benefits fall unexpectedly, remain high

Photographer: Luke Sharrett

US unemployment benefits have dropped unexpectedly to a one-month low, although recent increases in coronavirus cases and business closures threaten to keep lay offrose by early 2021.

Initial unemployment claims in regular state programs fell by 19,000 to 787,000 in the week ended December 26, according to a report by the Department of Labor on Thursday. This was lower than the median estimate of 835,000 in a Bloomberg survey of economists. The numbers are often volatile around the holidays, and last week also included Christmas. Without adjustments, receivables decreased by 31,736.

Ongoing applications for state programs, which roughly correlate with the total number of people receiving state unemployment benefits, also fell to 5.22 million in the week ending 19 December. Economists projected an increase to 5.37 million.

Highlighting the pandemic damage to the labor market as 2020 draws to a close, claims reached an average of 1.45 million per week this year, compared to around 220,000 in 2019.

The surprising drop in demand is a welcome sign, although the level remains high as the economic consequences of coronavirus continue to reverberate. While the stimulus package recently signed into law should cushion the closure and subsequent closures, it could take some time for funds to reach consumers and without a widely available vaccine, it is only a temporary measure.

What Bloomberg Economics says

“The lack of a clearer jump in new layoffs in response to wider restrictions on activity in some areas is reassuring. Even so, the rate is still high, and long-term unemployment is the most important issue, stressing the importance of the recent tax cut. “

– Andrew Husby, economist

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The S&P 500 fell early in trading, while the 10-year Treasury yield and the dollar changed slightly.

The decline of Illinois

Illinois, which reported a drop of more than 28,500 applications from the previous week, accounted for most of the overall decline in unadjusted demand. Pennsylvania, Georgia and Texas also saw significant declines in deposits. New York and California, among the states with the most restrictions related to the pandemic, have reported increases in unemployment claims.

However, an increase in jobless applications in the first half of December highlights economists’ expectations for a worsened labor market in the winter, as colder weather forces restaurants and retailers to close or reduce working hours, while an increase in Covid-19 cases requires tougher measures. in different states.

The December report, released next week, is expected to be on the weaker side. Economists predict a gain of about 70,000 jobs, the lowest since April, when wages fell. Several analysts predict downsizing.

In addition to the usual state applications, more than 308,000 initial applications were submitted last week under the pandemic unemployment assistance program, which provides funding for those who are not eligible for state programs, such as concert workers. In total, 8.46 million weeks of benefits were claimed for that program during the period ended December 12.

There were also 4.77 million total weeks of damages in emergency unemployment compensation, a separate program that provides additional weeks of benefits to Americans who have exhausted the regular state program.

– With the assistance of Chris Middleton and Sophie Caronello

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