US jobless claims unexpectedly jump to highest in three months

Applications for U.S. unemployment benefits unexpectedly jumped to the highest level in three months, suggesting the labor market’s recovery is faltering amid the surge in Covid-19 cases and widening business restrictions.

Initial jobless claims in regular state programs rose by 23,000 to 885,000 in the week ended Dec. 12, Labor Department data showed Thursday. On an unadjusted basis, the figure fell by about 21,000.

Continuing claims for state programs declined by 273,000 to 5.51 million in the week ended Dec. 5. That figure roughly approximates the number of people receiving state unemployment benefits, but doesn’t include the millions of people who have already exhausted those benefits or are receiving assistance through federal pandemic jobless aid programs.

A Bloomberg survey of economists had called for 818,000 initial state claims and 5.7 million continuing claims on an adjusted basis.

The increase in initial claims reflects rising filings in California and Illinois, two states where governments have imposed particularly restrictive lockdowns in the wake of the latest Covid-19 surge. That, paired with cooler weather, has led to additional job losses and growing risks for the economy in the months before widespread vaccine distribution.

With the outlook shaky, U.S. lawmakers are working out final details of a new relief package, while the Federal Reserve on Wednesday pledged to maintain its massive bond purchases until employment and inflation make “substantial further progress.”

U.S. stock futures pared gains following the report, while 10-year Treasury yields were little changed.

The latest initial claims data also coincide with the reference period for the December jobs report.