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