Unemployment Claims Ease Despite Uptick in Coronavirus Cases
The number of people applying for jobless benefits trended down in recent weeks, suggesting the pace of layoffs eased despite a resurgence in new coronavirus cases and the return of some economic restrictions.
Weekly claims for new unemployment benefits fell below 800,000 in October for the first time in seven months. While that level remains high by historic measures, it is down sharply from a peak of nearly seven million in late March, when states first introduced lockdowns in an effort to slow the spread of the virus. The Labor Department will publish the latest data at 8:30 a.m. Eastern time Thursday.
The number of workers receiving ongoing unemployment benefits, known as continuing claims, is also trending at the lowest level since March, but has remained more than four times February’s weekly average in recent weeks.
New benefit applications have declined as businesses continued to hire back employees they had laid off during the spring shutdown and some industries created new jobs in response to changes in consumer demand. And some regions of the country, including the South, saw economic recoveries continue in recent months, even as virus cases rose.
The labor market has recouped more than half of the 22 million jobs that were lost in March and April, but the pace of the recovery slowed in recent months.
The claims data comes a day ahead of the release of the October jobs report, the government’s broadest look at the labor market. Economists surveyed by The Wall Street Journal forecast employers added 530,000 jobs in October, a slowdown from the 661,000 jobs added in September and 1.5 million in August. Economists expect the unemployment rate to edge down to 7.7% from 7.9% in September.
Some industries are facing questions about their long-term viability. Last week, Boeing Co. said it would reduce its workforce by another 11,000, including 7,000 layoffs, as the aerospace company grapples with sharply lower demand for international and domestic air travel. Oil giant Exxon Mobil Corp. said it would cut 1,900 jobs in the U.S.
Rising cases of Covid-19, the disease caused by the new coronavirus, could pose a threat to job gains, economists say, if consumers become more cautious and more states bring back virus-related restrictions.
The seven-day moving average of reported Covid-19 infections in the U.S. reached a record on Tuesday and daily case counts are on the rise in most states, according to data from Johns Hopkins University. Some jurisdictions, including Maine and Massachusetts, recently tightened limits on indoor gatherings and business operations.
“As these last few weeks have shown us, the pandemic is not over,” said Alfonso Flores-Lagunes, an economist at Syracuse University. He said the recent surge in Covid-19 cases could lead to another round of business closures and job losses, potentially unwinding a portion of the labor market’s summer rebound.
And until a vaccine becomes widely available, Mr. Flores-Lagunes said, weaker consumer demand will continue to weigh on the recovery. “Going back to normal in terms of economic activity really depends on getting the virus under control,” he said.
Some businesses are hiring, reflecting that job creation remains strong, relative to last year’s pace, when employers added an average of 178,000 jobs a month. In New Jersey, where the unemployment rate declined by more than 4 percentage points in September to 6.7%, nonprofit organization Goodwill said it has been connecting workers from the pandemic’s hardest-hit industries, including food service and hospitality, to better-performing sectors such as customer service and sales.
“There are a lot of employers that are looking to hire folks,” said Jennifer Mauro, Goodwill’s vice president of employment and training in southern New Jersey and Philadelphia. She said some companies have created new positions related to virus safety, such as cleaning and sanitization, and demand for workers in transportation has increased with a rise in online shopping.
However, she added some people haven’t been able to return to the workforce because they lack child care, and others are reluctant to take jobs that pay significantly less than their previous work.
The number of job postings increased in October from the previous month, but they remain about 7.5% below their year-ago levels, according to ZipRecruiter economist Julia Pollak. There are also early signs that holiday hiring will be particularly weak this year, with fewer people making travel plans and shopping at bricks-and-mortar stores. Ms. Pollak said holiday-related job postings were down 18.5% in September and October compared with the same months last year.
Thursday’s report from the Labor Department provides data on regular state programs — which have served as an economic bellwether for a half-century — as well as details from two pandemic-specific programs first implemented in March.
The larger of those programs — available to the self-employed, gig workers and others not typically eligible for unemployment aid — paid benefits to about 10 million workers in early October, according to the Labor Department. That number exceeded those receiving benefits from state programs, which cover most U.S. workers.
A second pandemic program pays 13 additional weeks of benefits to individuals who have exhausted regular unemployment benefits. Enrollment in that program moved higher in recent weeks, topping three million last month. That suggests that some of the decline in state-benefit recipients represents workers who have exhausted the maximum amount of payments available through those programs.
Source: Dow Jones