By Gwynn Guilford and Hannah Lang
Worker filings for initial jobless claims jumped to nearly one
million last week, indicating rising layoffs amid a surge in
Covid-19 cases at the start of the year.
The number of applications for unemployment benefits, a proxy
for layoffs, rose by 181,000 to 965,000 last week, the Labor
Department said Thursday. That put initial jobless claims at their
highest level since mid-August and well above the roughly 800,000 a
week they have averaged in recent months.
The increase is another sign that the economic recovery is
sputtering, as coronavirus infections hit record levels
Economists surveyed by The Wall Street Journal expected the
government to report that new unemployment claims, a proxy for
layoffs, came in at a seasonally adjusted 800,000 last week.
The current level is far less than the peak of nearly seven
million jobless claims filed in late March. However, workers are
filing nearly four times more applications than they typically did
in the first two months of 2020, and still higher than in any other
recession on record.
"That's nowhere near what we saw in April fortunately. But it's
not a pretty picture," said Beth Ann Bovino, U.S. chief economist
for S&P Global Ratings. "We're stuck at a level that's four
times where it should be."
The report added to the evidence that the rapid rise in Covid-19
cases and fresh business restrictions in some places are weighing
on the labor market. Employers cut 140,000 jobs in December,
marking the first decline since the pandemic hit the country last
spring. Leisure and hospitality workers bore the brunt of the
decline, as a nationwide surge in coronavirus infections forced
many restaurants and bars to close or scale back operations. "The
people who had gotten hurt the most are still getting hurt the
most," Ms. Bovino said.
The recovery in the number of available jobs posted online
reversed course toward the end of December, according to job-search
site Indeed's measure of job-posting trends.
Other recent economic data suggest a broader economic slowdown
under way. Small-business optimism fell sharply in December.
Household spending declined for the first time in seven months in
November, with household income slipping too. New- and
existing-home sales fell in November from the previous month.
The U.S. seven-day moving average of new Covid-19 cases sat at
247,700 as of Tuesday, according to a Wall Street Journal analysis
of Johns Hopkins University data -- down slightly from the all-time
peak hit on Sunday. The U.S. averaged more than 3,340 deaths a day
in the past week.
Seasonal quirks and the passage last month of a $900 billion
Covid-19 relief bill could muddy the current claims picture.
The numbers of initial claims and those receiving state benefits
typically pick up in the first week after the two-week period that
spans Christmas and New Year holidays, said Elizabeth Pancotti,
policy adviser at Employ America, a left-leaning advocacy
"Any decrease we saw over the last two weeks we should view as
artificial, either because offices were closed [during the
holidays] or states were trying to implement the new extension,"
she said, referring to the bill that President Trump signed Dec.
27. It added a $300-a-week supplement for those receiving
unemployment benefits through March 14 and extended two federal
pandemic programs that otherwise would have paid out their final
benefits in December.
News of the relief package could also have contributed to an
uptick in initial claims by encouraging additional workers to apply
or previously eligible workers who exhausted their benefits to
Many individuals, though, are experiencing spells of
unemployment so long that they have exhausted their benefits
Hunter Keegan, 27 years old, of Fairfax County, Va., said he
lost his job as a corporate recruiter for a health-care firm last
April. He immediately began applying for work in the greater D.C.
area as well as in other parts of the country where the labor
market seems to be faring better. Some of these led to interviews
-- and he even received a few offers. All of those fell through,
though. And in October, Mr. Keegan received his last unemployment
Mr. Keegan said he no longer has any idea of how long it might
take him to find a job.
"I've been out of work for about eight months, and I need to get
back into the workforce full-time," Mr. Keegan said, adding that he
is paying for treatment of a chronic medical condition using
Many economists anticipate a labor-market rebound, as vaccines
are distributed more widely, spurring spending and hiring. Ms.
Bovino expects that to happen in the second half of 2021 but warns
that the labor market could well worsen in coming months. "It all
depends on containing the virus, and that looks to me like an
increasing struggle," she said.
Write to Gwynn Guilford at email@example.com
(END) Dow Jones Newswires
January 14, 2021 09:05 ET (14:05 GMT)
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