Claims for U.S. unemployment benefits are declining unexpectedly and remain high

Photographer: Luke Sharrett

U.S. demands for unemployment benefits fell unexpectedly to a one-month low, though recent increases in coronavirus cases and business closures threaten to hold dismissals high until early 2021.

Initial unemployment claims in regular state programs fell by 19,000 to 787,000 in the week ended Dec. 26, according to a report by the Department of Labor on Thursday. That was lower than the estimated 835,000 average in a survey of Bloomberg economists. Figures tend to be volatile during the holidays and last week included Christmas. Without adjustments, claims fell by 31,736.

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

Highlighting the damage caused by the pandemic in the labor market as it ends in 2020, profit claims have averaged 1.45 million a week this year compared to about 220,000 in 2019.

The surprise decline in claims 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 blow of other shutdowns and closures, it can take a while 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 leap in new redundancies in response to wider activity restrictions in some areas is reassuring. However, the rate remains high and long-term unemployment is the most important problem, which highlights the importance of the recent tax relief. “

– Andrew Husby, economist

For the full note, click here

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

Decline of Illinois

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

However, the recovery in the number of jobless applications during the first fortnight of December highlights economists’ expectations for a worsening labor market in the winter, as colder weather forces restaurants and retailers to close or reduce the schedule, while an increase in Covid-19 cases requires tougher measures. in several states.

The December job report, released next week, is expected to be the weakest. Economists predict a gain of about 70,000 jobs, the lowest since April, when payrolls fell. Several analysts predict that cash will be reduced.

In addition to periodic state claims, more than 308,000 initial applications were filed last week under the Pandemic Unemployment Assistance Program, which provides funding for those who are not eligible for in state programs, such as concert workers. In total, 8.46 million weeks of profits were claimed for this program during the period ended December 12th.

There were also 4.77 million weeks in total claims to pandemic emergency unemployment compensation, an independent program that provides additional weeks of benefits to Americans who have exhausted the usual state program.

– With the assistance of Chris Middleton and Sophie Caronello

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