US initial jobless claims back above 1 million last week

Initial jobless claims rose last week, underscoring the fragility of the US economy during the novel coronavirus pandemic, as Congress debates a new stimulus bill.

More than 1.1 million people filed for jobless benefits for the week ended Aug 15, up 135,000 from the prior week, the US Labor Department reported Thursday.

Economists surveyed by Dow Jones expected 923,000 new claims to be filed.

“The number of individuals claiming benefits remains extraordinarily high — more than twice the peak of the Great Recession — underscoring that the labor market is a long way from being healthy,” said Nancy Vanden Houten, lead economist at Oxford Economics, in a research note to investors.

Last week, initial unemployment claims fell below 1 million for the first time in 21 weeks. The Labor Department this week revised the total up by 8,000 to 971,000.

The number of workers filing first-time unemployment claims peaked at about 7 million in March during the worst of the COVID-19 pandemic.

The economy shut down in March as governors ordered stores, restaurants, bars, gyms, theaters and many schools to close as part of the effort to limit the spread of the virus.

Prior to the shutdowns, the unemployment was rate was 3.5 percent — near a record low.

The latest government figures show the unemployment rate dropped to 10.2 percent from 10.6 percent.

US companies hired about 9.3 million workers in the last three months, the Labor Department said.

But the hiring hasn’t replaced 50 percent of the 22 million jobs lost in March and April.

The Labor Department’s fourweek moving average of first-time claims — a less-volatile measure because it evens out spikes — fell to 1,175,850, a decline of 79,000 from the previous week.

Continuing claims, or those receiving unemployment for two weeks or more, fell by 646,000 to 14.88 million for the week ended Aug 8, government statistics showed.

Still, about 14.8 million workers received unemployment benefits for the week ended Aug 8 — more than double the 6.6 million during the recession of 2008–09.

“Claims are still down 325,000 from the last full week of July,” economists at Jefferies Financial Group said in a research note. “The next few weeks will be telling in terms of how much of the recent improvement has been fundamental as the Sun Belt has recovered from their COVID surge, or technical as the $600 benefit has expired.” But there may be trouble ahead. “The US Congress will likely approve additional relief measures for unemployed workers in the coming weeks after earlier benefits expired,” said Moody’s Investor

Service in a report. “But the delay will weaken the purchasing power of some US households and hurt their ability to meet financial obligations.”

Consumer spending represents about 66 percent of the US economy.

Discount retailer Target this week reported its strongest quarterly growth in company history.

The Minneapolis-based company said online sales increased 195 percent in the second quarter compared with the same period a year ago.

Walmart, the nation’s largest retailer, also reported strong sales during the coronavirus pandemic as many shoppers ordered online and picked up their purchases in store parking lots to maintain social distancing.