US weekly jobless claims record sudden spike to 1m plus

Washington: Applications for US unemployment benefits unexpectedly increased last week, a stumble for the labor market in its long road to recovery.

Initial jobless claims in regular state programmes rose by 135,000 to more than 1.1 million in the week ended August 15, US Labor Department data show. Continuing claims – the total number of Americans claiming ongoing unemployment assistance in those programmes – decreased to 14.8 million in the week ended August 8.

The median estimate in a Bloomberg survey of economists called for 920,000 initial claims in the latest week, which coincides with the survey period for the government’s monthly employment report.

The pickup in jobless claims reinforces forecasts that improvement in the labor market will occur in fits and starts. Claims well exceed the worst week in the 2007-2009 recession, and while new COVID-19 cases have been slowing, thousands are still reported daily.

The impact is particularly prominent in the consumer-facing industries such as restaurants, travel and leisure. Sustained weekly increases in claims would raise concern that the job market is in danger of unraveling after recent progress.

Persistent issues

At the same time, the downward trend in continuing claims is favorable news for the recovery, though headwinds persist. Companies are going bankrupt and small businesses are disappearing at a time when the economy has only recovered about half of the jobs it lost in March and April. The unemployment rate is still nearly three times its February level.

The absence of an additional stimulus package threatens the fragile economic recovery as businesses run out of aid, while the uneven reopening of schools is making it difficult for many parents to work.

With the expiration of the extra $600 in weekly jobless benefits at the end of last month and the inability of lawmakers to come to an agreement on how to extend them, President Donald Trump signed an executive action to provide $300 a week in federal support to most unemployment benefit recipients.