U.S. Unemployment Claims Rise to Highest Level Since September
The number of workers seeking unemployment benefits climbed sharply to 853,000 last week, as the broader labor-market recovery has shown signs it is slowing.
Weekly initial claims for jobless benefits from state programs, a proxy for layoffs, increased by a seasonally adjusted 137,000 in the week ended Dec. 5, the Labor Department said Thursday. The total marked the highest level of applications since September, but was still well down from a peak of nearly seven million in late March.
The number of applications for a separate federal pandemic program also rose sharply last week.
Jobless claims have mostly trended down since the spring, when the coronavirus pandemic caused widespread business shutdowns. Since falling below 1 million a week in August, the pace of improvement slowed. That matches with other measures showing the economy is recovering, but at a slower pace in recent months.
Claims had held between 700,000 and 800,000 a week since mid-October, before jumping up last week. Economists caution that week-to-week data can be volatile around holiday periods.
“We’re seeing a cooling trend in the labor market, with rising layoffs,” said Nela Richardson, chief economist at human-resources software firm Automatic Data Processing Inc. “That’s concerning because a lot of the unemployment benefits these folks are applying for expire at the end of the year.”
Thursday’s report showed jobless applications increased in most states, led by populous places such as California, Illinois, Texas and Virginia.
U.S. stocks fell Thursday after the labor-market data was released.
The broader labor-market recovery has continued, but showed signs of slowing in November when employers added 245,000 jobs, according to the Labor Department. Private-sector data indicated the number of job openings edged down in early December.
In a separate report, the Labor Department said U.S. consumer prices increased last month, as wages rose slightly. The consumer-price index, which measures what Americans pay for household items such as lawn mowers and services such as eye care, grew a seasonally adjusted 0.2% in November compared with October.
Jobless claims data has been viewed as a bellwether for economists and policy makers for a half-century. However, the Government Accountability Office, a federal watchdog, last month said jobless claims data was flawed.
The GAO said states have provided inconsistent data to the Labor Department and incidents of fraud have distorted the numbers. The Labor Department on Thursday said the measurement of ongoing benefits, known as continued claims “reflect a good approximation” of the number of insured unemployed workers filing for benefits.
That number rose by 230,000 to 5.8 million in the week ended Nov. 28. State programs provide unemployment insurance to most U.S. workers.
Ms. Richardson said a return to net monthly jobs losses this winter “can’t be ruled out if we’re seeing a surging pandemic causing states to take steps to roll back the reopening process.” However, she added that increased federal stimulus and an expedient rollout of a vaccine for Covid-19 could support job growth.
Just more than 19 million continuing claims were filed for all programs for the week ended Nov. 21, including two pandemic-relief programs Congress established earlier this year. That measure, which is not adjusted for seasonality, fell by 1.1 million from the prior week.
Those pandemic programs — one for gig workers and others not typically eligible for jobless benefits, and another for those who have exhausted eligibility for other programs — are set to expire at the end of the year. People in the pandemic programs accounted for most of those receiving benefits last month.
Consumer-inflation data showed price increases were broad-based, with no one component accounting for more than a quarter of the index’s overall rise, according to the Labor Department.
Apparel and transportation services saw some of the biggest price increases in November, rising 0.9% and 1.8%, respectively. Prices for used cars, which rose sharply earlier this year, declined 1.3%. Food prices also dropped, as grocery prices fell 0.3%.
The U.S. economy overall has recovered much of the ground lost earlier this year, but the expansion’s momentum has eased since the summer’s swift gains. Consumer spending rose in October for the sixth straight month, though at a slower pace, according to the Commerce Department. The manufacturing and services sectors expanded in November, according to the Institute for Supply Management.
There are ample job openings in several industries, including in the finance, accounting and technology sectors, said Paul McDonald, senior executive director at professional staffing firm Robert Half International Inc.
“We’re still seeing strong demand,” he said. “But those with jobs are reluctant to leave.” He said some fear they will lose seniority and be at greater risk for a layoff if the economy weakens. While total job loss this year was much higher than in the 2007-2009 recession, the finance sector has been less affected, and many firms are hiring, Mr. McDonald said, to keep up with demand for mortgage refinancing and home and auto loans.
Still, recent layoffs have occurred in the entertainment and leisure industry, including at restaurants, as well as at retailers and in the transportation sector, at employers including airlines and transit authorities, said Andy Challenger, senior vice president at outplacement firm Challenger, Gray & Christmas Inc.
Many workers laid off this spring expected to return to their jobs fairly quickly. Those laid off in recent weeks are more likely to have seen their position eliminated, he said.
“When someone is let go today, that means the company doesn’t see that job existing for a while,” Mr. Challenger said.
Grace Keros last month laid off all but four staff members from American Coney Island, a downtown Detroit diner that employed more than 20 workers before the pandemic, after the state of Michigan imposed new restrictions on in-person dining. Ms. Keros, the owner, is now limited to carryout orders and closes the former 24-hour joint as early as 4 p.m.
“In March, I had to call the locksmith to help me lock up because I couldn’t find the key,” she said.
When spring restrictions were lifted, Ms. Keros said she was able to bring back about half her staff, but sales were down with fewer office workers in the area and no crowds from baseball games or events. Now with winter approaching, and unable to serve diners inside, she said she is worried about her future, and that of her employees, especially because they won’t receive an extra $600 a week in unemployment benefits. Those enhanced benefits ended in July and other federal programs are set to expire this month.
“If we’re going to be told we can’t operate, the government needs to get its act together and help these workers,” she said.
Source: Dow Jones