US ben­e­fit claims slide af­ter end of $600 weekly top-up

The Daily Telegraph - Business - - Business - By Rus­sell Lynch

A SUR­PRISE drop in ben­e­fit claims de­liv­ered some rare good news for the ail­ing US jobs mar­ket yes­ter­day amid warn­ings that the coun­try’s Covid-19 death toll could pass 200,000 by the end of Septem­ber.

Fig­ures showed a 249,000 drop in ini­tial claims to 1.19m in the week to Aug 1, mark­ing the big­gest im­prove­ment for nearly two months.

The num­ber of claims re­mains more than five times above pre-cri­sis lev­els even af­ter the lat­est fall, how­ever.

Faster indi­ca­tors have also shown wan­ing hir­ing as a surge in coro­n­avirus cases forces many Amer­i­can states to reim­pose re­stric­tions.

Nancy Van­den Houten, a US econ­o­mist at Ox­ford Eco­nomics, said the fig­ures sug­gested that the stalling in the labour mar­ket re­cov­ery in July did not get worse.

But she warned that the lat­est fig­ures could be skewed by the end­ing of the gen­er­ous $600 (£457) a week top­ups for un­em­ploy­ment ben­e­fits which fin­ished last month. Democrats are in ne­go­ti­a­tions with pres­i­dent Don­ald Trump over a re­place­ment pack­age, which is likely to be less gen­er­ous af­ter re­search found two thirds of claimants took home more in ben­e­fits than they earned in their pre­vi­ous jobs.

Ms Van­den Houten said: “The elim­i­na­tion of those ben­e­fits may have dis­cour­aged some work­ers from fil­ing. If that’s the case, claims may in­crease when those ben­e­fits are re­newed.

“We ex­pect pol­i­cy­mak­ers will agree to ex­tend those ben­e­fits, but prob­a­bly at less than $600 per week.”

The num­ber of un­em­ployed peo­ple is still 12m above pre-pan­demic lev­els and jobs fig­ures due to­day are ex­pected to show lim­ited im­prove­ment in hir­ing, jeop­ar­dis­ing Mr Trump’s re-elec­tion prospects.

The cur­rent un­em­ploy­ment rate of 11.1pc is three times higher than the pre-pan­demic 50-year low of 3.5pc.

“Stock traders are tak­ing this as good eco­nomic news but they do not want to bet big ahead of the US non-farms pay­roll data [due to­day],” said Naeem As­lam from Ava­trade.

Global in­sur­ance gi­ant MetLife said yes­ter­day it as­sumed US deaths from Covid-19 will rise to about 200,000 by the end of Septem­ber, up more than 25pc from the cur­rent toll of 158,546.

‘The cur­rent un­em­ploy­ment rate of 11.1pc is three times higher than the prepan­demic fig­ure of 3.5pc’

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