New jobless claims fall to lowest level in 7 months

New jobless claims in Michigan dipped last week to the lowest level since the coronavirus pandemic swept the country in mid March, and unemployment claims nationally also took an unexpected drop.

New Michigan jobless claims totaled 5,610 for the week ending Oct. 17, roughly a third of the new claims filed the previous week and close to the mid Marchl evel when the state’s unemployment rate was 1.75%, the U.S. Labor Department reported Thursday.

Nationally, there were 787,000 new jobless claims. Analysts had expected 870,000.

While the declines were welcomed by economists, they cautioned that the improvement in the labormarket might be temporary with coronavirus cases rising sharply that could lead to more layoffs and customers fearful of shopping, traveling or dining out.

“We doubt it will continue as COVID infections spread rapidly, pushing down demand for discretionary consumer services, especially in the hospitality sector,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, referring to the portion of the economy that includes hard-hit hotels, restaurants and bars.

While Michigan’s new claims numbers are a marked improvement, con-

tinuing jobless claims remain high, though they are also falling.

Continuing claims reported lags initial claims by a week. Michigan had 232,109 continuing claims in the state system for the week ending Oct. 10.

That number, though continuing to fall, is still three times the 75,075 continuing claims reported in mid March, implying that some job lossesmay permanent or layoffs long term.

Job growth has slowed for three straight months, leaving the economy still 10.7 million jobs short of its prepandemic level. The unemployment rate remains high at 7.9%. Michigan’s official unemployment rate is 5.39%.

With a presidential election

in less than two weeks, negotiations in Congress for more financial aid to struggling workers is stalled and economists expect the economy to slow without it.

The number of people whose state benefits have expired and are now receiving aid for an additional 13 weeks fromfederal and state extended benefit programs rose 600,000 last week to 3.7 million, the government said.

The extra $600 a week in unemployment benefits provided by the CARES Act in March expired in July, and most states ran out of additional $300-$400 a week in benefits in August, leaving unemployed workers to get by on much lower state unemployment checks. In Michigan, the maximum benefit is $362 a week.

Gov. Gretchen Whitmer this week signed legislation extending Michigan’s normal

20 weeks maximum of benefits to 26 weeks and urged state lawmakers to make the extension permanent.

Laid-offworkerswho have exhausted their regular state benefits have been able to collect additional weeks of extended benefits in states with high unemployment rates which ismost of them.