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U.S. Jobless Claims Retreat From Three-Month High

The number of workers seeking unemployment benefits fell last week, amid signs the economy is continuing to recover, but at a slowing pace.

New jobless claims, a proxy for layoffs, came in at 803,000 for the week ended Dec. 19, down from an upwardly revised 892,000 the prior week, the Labor Department reported Wednesday.

The latest figures marked a retreat from a three-month high. Still, claims are hovering at their highest levels since recent peaks in September, as states and local municipalities impose fresh restrictions on social and business activity to combat a surge in coronavirus cases.

The pandemic “has always been the boss of the 2020 economy,” said Nela Richardson, chief economist at payroll-processing firm ADP. “It’s not surprising that as cases have risen, it would be most acutely felt in the labor market.”

Ms. Richardson said the rollout of coronavirus vaccines provides room for optimism, but added that jobless claims during the pandemic have held steadily above levels during the 2007-09 recession.

“Even the widespread distribution of the vaccine is not going to be a panacea for all the scarring that’s happened in the labor market,” she said.

Other parts of the economy have shown signs of losing momentum as coronavirus cases have risen and businesses and consumers grapple with renewed restrictions.

Existing-home sales, which had been a bright spot in recent months, fell 2.5% in November from October. An index of consumer confidence from data firm The Conference Board declined in December compared with November.

Still, initial jobless claims have fallen sharply from nearly seven million in late March. Meanwhile, continuing jobless claims, a proxy for the number of people collecting unemployment benefits through regular state programs, fell to a seasonally adjusted 5.3 million in the week ended Dec. 12 from 5.5 million a week earlier, according to the Labor Department.

Economists project the recovery will gain momentum in the second half of next year, after the latest coronavirus relief package — passed this week by Congress — and as vaccines become more widely available.

Congress’s legislation includes provisions to buttress unemployment payments and extends two other federal unemployment programs that were set to expire at year-end.

One of those programs provides extended benefits to people who have exhausted state benefits. About 4.79 million people were receiving aid through the program in the week ended Dec. 5, down slightly from 4.8 million the prior week, a sign the number of workers experiencing protracted unemployment was holding mostly steady.
Source: Dow Jones

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