WASHINGTON (Reuters) – The number of Americans filing a claim for the first time for the benefit of the unemployed unexpectedly plunged last week, while labor market recovery as a raging COVID-19 pandemic dipped. Became a threat to the country.
The announced layoffs by US companies rose 18.9% in December, other figures showed on Thursday. Although service industry activity intensified last month, employment fell. If the news is to be believed then on Wednesday, then private companies shed workers in December, increasing the risk that the economy lost jobs last month for the first time since April.
Nevertheless, a slowdown in the economy is unlikely after the government approved additional epidemic relief in late December. Democrats won two Senate seats in runoff elections in Georgia on Wednesday, giving the party control of the Chamber and increasing prospects for presidential-election Joe Biden’s legislative agenda. Congress formally on Thursday marked the hour of Biden’s election victory after a storm in the US Capitol by supporters of President Donald Trump.
“The labor market will struggle this winter due to an increase in COVID-19 cases,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Lester, Pennsylvania. “The good news is additional support is expected in the first quarter.”
The Labor Department said initial claims for the state’s unemployment benefits adjusted to 787,000 for the week ended January 7, compared to 790,000 in the prior week. Economists polled by Reuters estimated 800,000 applications in the latest week.
Difficulties in adjusting the data for seasonal fluctuations around this time of year were claimed. Unreasonable claims increased from 77,400 to 922,072 last week. 1.08 million people filed claims last week, including a government-funded program for self-employed, gig workers, and others not qualifying for regular state unemployment programs.
(Graphic: Unemployed claims -)
The higher claims are in line with other data that suggested the economy has been far from business restrictions and consumer spending cuts due to the epidemic. At the Federal Reserve’s December 15–16 meeting published on Wednesday, policymakers showed increasing cases of coronovirus “would be particularly challenging for the labor market in the coming months.”
According to the US Center for Disease Control and Prevention, COVID-19 cases in the United States have jumped more than 21 million, making the virus the first in China at the end of 2016 to over 356,000.
Global displacement firm Challenger, Gray & Christmas, said in a second report on Thursday that US companies announced 77,030 job cuts in December, up from 64,797 in November. Total layoffs in 2020 were a record 2.305 million compared to 2019, an increase of 289%. Almost half of the job cuts were due to the epidemic.
(Graphic: Challenger Gray -)
Separately, the Institute for Supply Management (ISM) said that the employment index of the service industry declined to 48.2 from 51.2 in November last month. ISM said the companies’ comments included “fewer employees required in restaurants due to restrictions” and “we had to reduce our workforce even more.”
US stocks were trading higher as investors placed bets on more pandemic aid under a Democrat-controlled Congress. A basket of currencies was received in dollars. US Treasury prices fell.
Meet at a profit
The government is scheduled to publish its proximity employment report for December on Friday. According to a Reuters poll of economists, the probability of nonfarm payrolls increased by 71,000 jobs after a 245,000 increase in November.
This would be the smallest gain since the recovery of jobs began in May and would mean that the economy improved by about 12.5 million out of the 22.2 million jobs lost in March and April.
Unemployed claims remain above their 665,000 peak during the Great Recession of 2007–09, although they fell to a record 6.867 million in March. In late December the government approved approximately $ 900 billion in additional fiscal stimulus, including a renewal of a $ 300 unemployment supplement as of March 14.
Government-funded programs for self-employed, gig workers and others who do not qualify for state unemployment programs, as well as those who have exhausted their benefits, were also extended into the package .
The claims report also showed that the number of people receiving benefits decreased from 126,000 to 5.072 million after the initial week of aid in the week ended 26 December. But most have ended their eligibility, which is limited to six months in most states. About 4.517 million workers filed for extended unemployment benefits in the week ended 19 December. Roughly 19.177 million people were receiving benefits under all programs in mid-December.
The economy went into recession in February. Although it is expected to expand at a 5% annual rate in the fourth quarter, the bulk of GDP growth will likely come from the reconstruction of inventions.
A fourth report by the Department of Commerce increased the trade deficit by 8.0% to $ 68.1 billion after November 2006. The jump in imports increased losses.
(Graphic: Balance of Trade -)
Growth will be very weak in early 2021, but should pick up in the spring as the vaccine rollout continues, and the stimulus supports consumer spending, ”said Gus Fauscher, chief economist at PSTC Financial of Pittsburgh, Pennsylvania.
Reporting by Lucia Mutikani; Editing by Dan Burns and Andrea Ricci
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