US jobless claims ease, layoffs jump 54%
washington — The number of Americans seeking jobless benefits fell last week, but a staggering 31.3 million people were receiving unemployment cheques in mid-July, suggesting the labor market was stalling as the country battles a resurgence in new Covid-19 cases that is threatening a budding economic recovery.
Other data on Thursday showed a 54 per cent surge in job cuts announced by employers in July. The reports followed on the heels of news this week of a sharp step-down in private payrolls in July and continued declines in employment at manufacturing and services industries.
“Repeated shutdowns for virus containment remain a threat to the labor market, which is already weak,” said Rubeela Farooqi, chief US economist at High Frequency Economics. “Without effective virus containment the recovery remains at risk from ongoing job losses that could further restrain incomes and spending.”
Initial claims for state unemployment benefits fell 249,000 to a seasonallyadjusted 1.186 million for the week ended August 1, the Labour Department said on Thursday. That was the lowest reading since mid-March. Claims remain well above the peak of 695,000 during the 2007-09 Great Recession.
Economists polled by Reuters had forecast 1.415 million applications.
Coronavirus cases soared across the country last month, forcing authorities in some of the hard-hit areas in the West and South to either shut down businesses again or pause reopenings, sending workers back home. Though infections have eased about five per cent nationally, they jumped last week in Oklahoma, Montana, Missouri and 17 other states.
The public health crisis is hurting demand for goods and services, broadening layoffs to sectors of the economy that were not initially impacted when nonessential businesses like restaurants and bars were shuttered in mid-March to slow the spread of the respiratory illness. Businesses are also cautious about hiring. Claims topped out at a record 6.867 million in late March. Some economists expect claims to fall in the coming weeks following the end of a $600 weekly unemployment benefits supplement last Friday. Industry groups said the supplement was encouraging furloughed and unemployed workers not to return to their jobs.
Other economists, however, expected claims to remain elevated because of weak demand and the expiration of the US government’s Paycheck Protection Program that gave businesses loans that can be partially forgiven if used for employee pay. —