WASHINGTON: New applications for jobless benefits resumed their decline after two weeks of increases, hitting a new pandemic low in a surprise sign of improvement, but economists warn the battered US job market recovery remains painfully slow.
Workers filing for first-time jobless benefits dropped last week to 1.19 million, well below what analysts had been expecting, and applications for pandemic assistance also fell sharply, the Labor Department reported today.
However, the four-week average for initial unemployment claims was barely changed at 1.33 million in the week ended Aug 1, the report said.
The data show job losses have continued, but at a slower pace, in recent weeks, as cases of Covid-19 spiked in many states forcing authorities to reimpose some restrictions, with 6.7 million new claims filed in the month.
Meanwhile, talks in Washington on a new emergency spending plan and expanded unemployment payments continue to drag on with Democratic leaders and President Donald Trump’s economic team still far apart.
The additional US$600 (RM2,514) in weekly jobless payments from the federal government expired at the end of July, and Republicans want to slash the amount.
Nancy Vanden Houten of Oxford Economics said the end of the benefits may have discouraged workers from submitting new applications. “If that’s the case, initial claims would likely bounce back if and when those benefits are renewed,” she said in an analysis.
First time filings have been above one million for 20 consecutive weeks.
The total workers continuing to receive jobless benefits fell to 16.1 million in the week ended July 25, nearly 10 times higher than a year earlier, and the insured unemployment rate dipped six-tenths to a still-high 11%.
That “underscores the painfully slow recovery in the labour market,” Vanden Houten said.
When all programmes are combined, including pandemic emergency assistance and expanded unemployment benefits, 31.2 million workers were receiving help through the week ended July 18 – compared to just 1.7 million a year earlier.
Economists warn that the job market may have stalled in July, with the closely-watched government employment report tomorrow expected to show a far smaller increase than in June.
“Repeated shutdowns for virus containment remain a threat to the labouur market, which is already weak. The possibility of mounting layoffs that could become permanent is high,” Rubeela Farooqi of High Frequency Economics said in an analysis.
“Overall, without effective virus containment the recovery remains at risk from ongoing job losses that could further restrain incomes and spending.”
And even the good news in the report is not as good as it appears, economist Joel Naroff said, noting that the latest week does not include the states where workers continuing to receive benefits file biweekly.
Although further widespread shutdowns appear unlikely, with layoffs from the second virus wave falling, “the clear slowdown in the rate of decline over the past few weeks is ominous,” Naroff said. – AFP