The number of Americans filing first-time applications for unemployment benefits surged last week, confirming a weakening in labour market conditions as a worsening COVID-19 pandemic disrupts operations at restaurants and other businesses.
Initial claims for state unemployment benefits totalled a seasonally adjusted 965,000 for the week ended Jan. 9, compared to 784,000 in the prior week, the U.S. Labour Department said on Thursday. Economists polled by Reuters had forecast 795,000 applications in the latest week.
It's the highest number since late August. Applications declined over the summer but have been stuck above 700,000 since September.
Claims were also likely lifted by re-applications for benefits following the government's renewal of a $300 US unemployment supplement until March 14 as part of nearly $900 billion in additional relief approved at the end of December.
Government-funded programs for the self-employed, gig workers and others who do not qualify for the state unemployment programs as well as those who have exhausted their benefits were also extended.
Authorities in many states have banned indoor dining to slow the spread of the coronavirus. The economy shed jobs in December for the first time in eight months.
The Federal Reserve's Beige Book report of anecdotal information on business activity collected from contacts nationwide in early January showed on Wednesday that "contacts in the leisure and hospitality sectors reported renewed employment cuts due to stricter containment measures."
The central bank also noted that the resurgence in the coronavirus was causing staff shortages in the manufacturing, construction and transportation sectors.
Most infections of any country
The virus has infected more than 22.5 million people in the United States and killed over 376,188, the most of any country. More than 4,300 deaths were reported Tuesday, a record high.
Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession. Economists say it could take several years for the labour market to recover from the pandemic.
5.3 million Americans receiving jobless benefits
In addition to last week's first-time applications for unemployment aid, the government said Thursday that 5.3 million Americans are continuing to receive state jobless benefits, up from 5.1 million in the previous week. It suggests that fewer people who are out of work are finding jobs.
About 11.6 million people received jobless aid from two federal programs in the week that ended Dec. 26, the latest period for which data is available. One of those programs provides extended benefits to people who have exhausted their state aid. The other supplies benefits to self-employed and contract workers.
