By Kim Mackrael 

A recent increase in the number of workers seeking unemployment benefits is expected to have steadied last week, showing the labor market is still healing at a time when more states bring back economic restrictions to address a surge in Covid-19 cases.

Initial jobless claims, a proxy for layoffs, have held in a historically high range of 700,000 to 800,000 since mid-October, more than three times their pre-pandemic average. They edged higher for two consecutive weeks in November, a possible sign that tougher virus restrictions might be affecting the labor market, but remain well below their late March peak of nearly seven million.

The Labor Department will publish the latest data at 8:30 a.m. ET on Thursday.

Weekly claims data, which policy makers and investors have relied on throughout the pandemic for timely information about the labor market, came under scrutiny this week after a government watchdog said the data were flawed. The Government Accountability Office said states have provided inconsistent data to the Labor Department and incidents of fraud have distorted the numbers.

The Labor Department agreed to clarify how jobless claims are counted in the weekly jobless-claims report, but an agency spokeswoman said the department didn't anticipate any changes in methodology.

Other recent data, from the Commerce Department, suggest the economic recovery from the spring's shutdowns has continued. Consumer spending and retail sales both rose in October, though at a slower pace compared with prior months. Sales of newly built homes in October remained near their highest level in more than a decade.

A Federal Reserve report Wednesday said the economy's recovery picked up this fall, and the Institute for Supply Management said Tuesday that U.S. manufacturing activity grew in November for the seventh straight month, though that report showed employment in the sector declined last month.

Through October, U.S. employers recovered 12.1 million of the 22 million jobs that were lost in March and April. The Labor Department will release November's jobs report, its broadest accounting of the labor market, on Friday. Economists surveyed by The Wall Street Journal forecast employers added 440,000 jobs in November, a slowdown from the 638,000 jobs added in October. They expect the unemployment rate to decline to 6.7% from 6.9% in October.

"What we're seeing overall is some stagnation in the labor market," said Kathy Bostjancic, economist at Oxford Economics. "I think you're seeing a marked cooling in demand for workers amid overall slowing in economic momentum."

The resurgence in virus cases, along with continued fiscal tightening by state and local governments, is also holding back economic activity, she said.

At the end of the week that included the Thanksgiving holiday, the seven-day moving average for new reported cases of Covid-19 in the U.S. was more than double its month-ago level, according to data from Johns Hopkins University.

Governors in many states, including Kentucky, New York, Illinois and Washington, tightened economic restrictions in recent weeks to try to curb the spread of the virus.

Terri Greeno, who owns four Express Employment Professionals staffing offices in the Chicago area, said employers in some industries are still struggling to fill jobs, even after Illinois Gov. JB Pritzker, a Democrat, placed a statewide ban on indoor dining this fall.

She said some people are staying out of the workforce because their child-care options are limited, while others seem reluctant to move into a different industry. Unemployment benefits might also be a factor in some peoples' decision not to work, she said.

"There are jobs," Ms. Greeno said. "Anything in supply-chain manufacturing or distribution is extremely busy." She said demand is also high for office administration and call-center workers.

Still, many economists anticipate the labor-market recovery will remain tempered until a vaccine is widely available. Once that happens, "some of these jobs may start to come back," said Jevay Grooms, an economist at Howard University. Other job losses might be permanent, she said, with lower-income earners, including many women and people of color, more likely to remain outside the labor force for longer.

Lance Burwell said he was furloughed from his job as a resort manager near Lake Tahoe soon after California declared a state of emergency in March, and was laid off permanently 2 1/2 months later.

He and his wife moved back to their home in Carbondale, Colo., in October, which they had been renting out to others for the past year so they could live near Mr. Burwell's workplace in California. Mr. Burwell said he owes about $28,000 in missed monthly mortgage payments, and had to withdraw $35,000 from his retirement plan to cover living expenses.

After initially concentrating his job search on management positions in the hospitality industry, where he has worked for the past 25 years, Mr. Burwell said he is branching out to other industries and has lowered his salary expectations. This week, he interviewed for a sales-supervisor job that would pay about a third of his pre-pandemic income.

"I've requested forbearance for three successive quarters -- the next quarter being Jan. 1," Mr. Burwell said. "I hope to God I have a job by then."

Sarah Chaney Cambon contributed to this article.

Write to Kim Mackrael at kim.mackrael@wsj.com

(END) Dow Jones Newswires

December 03, 2020 05:44 ET (10:44 GMT)

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