By Sarah Chaney 

Unemployment claims likely held steady at historically high levels last week, an indication companies continued to lay off workers nearly five months into the coronavirus pandemic.

Economists estimate initial unemployment claims fell slightly to 1.1 million last week, which would mark 21 straight weeks claims logged in above 1 million. New applications for unemployment benefits declined in the prior week and are down significantly from a peak of near 7 million in March, but still nearly twice the pre-pandemic record of 695,000.

The number of people collecting unemployment benefits through regular state programs, which cover the majority of workers, decreased at the end of July. That figure, at about 16.1 million, was still well above the pre-pandemic peak of 6.6 million in 2009.

"We're just running a lot of layoffs week after week even as a lot of people are coming back to work," said Guy Berger, economist at LinkedIn. "There's still a lot of labor market distress out there that's emerging."

Mr. Berger said businesses remain cautious and more of the layoffs occurring now are permanent than at the onset of the pandemic. Further, companies could face a pullback in demand since the extra $600 weekly unemployment benefit expired last month, leaving less money in workers' pockets.

President Trump signed an executive action on Saturday that authorized states to extend a federally funded $300 in benefits and provide an extra $100 in state-funded benefits. States will likely not start implementing the supplemental benefits for weeks, as they must apply for the federal funds and set up new programs.

Thursday's report could help shed light on whether the expiration of the extra $600 a week in benefits discouraged individuals from applying for benefits last week.

"Taking that temporary job may be more attractive when the benefits are lower," said Julia Pollak, economist at job site ZipRecruiter.

There are signs the battered labor market is healing and likely past the worst of the crisis. Employers added 1.8 million jobs in July, the third consecutive month of hiring. The jobless rate fell last month to 10.2% after peaking near 15% in April.

Tara McCracken, Goodwill Industries International Inc.'s director of workforce development in northwest North Carolina, said the agency has seen greater demand for its job-search programs within the past two months.

"They want to get to work," Ms. McCracken said, noting job openings in the leisure-and-hospitality industry -- the lifeblood of Asheville, North Carolina's economy -- have been scarce, but appeared to tick up last week.

The job-market recovery is far from complete and employment gains have yet to restore half of the jobs lost due to the coronavirus pandemic.

"The loss of jobs was very, very immediate, and many companies cut as much as they possibly could right away and further cuts are like amputations," Ms. Pollak said. "Those are cuts that speak to the long-term viability of these companies."

A Cornell University survey showed about 31% of workers who were placed back on payrolls after an initial layoff were laid off a second time.

Fort Lauderdale, Fla. resident Zack Matthews has lost his job multiple times in recent months. Mr. Matthews was laid off from his creative director position at a telecommunications company in March.

When his unemployment benefits didn't come through, Mr. Matthews picked up a job as an overnight manager at a bar and grill in late June, but he was laid off two weeks later.

Mr. Matthews started a new job at the end of July as a production manager at a photo and video studio. His unemployment benefits arrived in two lump-sum payments at the beginning of August, four months after he had first applied for them.

"It's been quite a year," Mr. Matthews said.

Kim Mackrael contributed to this article.

Write to Sarah Chaney at sarah.chaney@wsj.com

 

(END) Dow Jones Newswires

August 13, 2020 05:44 ET (09:44 GMT)

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