US jobless claims surge by 885,000 in one week

Another 885,000 Americans filed for first-time unemployment benefits last week, as fresh restrictions to combat the resurgence in coronavirus cases continue to strain the jobs market.

Weekly jobless claims increased by 23,000, from 862,000 last week. Economists had expected claims to moderate at 800,000. That came alongside a rise of 40,000 in claims for federal pandemic unemployment assistance to 455,037, the US labour department said on Thursday.

While weekly figures can be volatile around the holidays, the number of claims remains elevated. About 20.65 million people are receiving unemployment benefits of some kind nine months after the coronavirus crisis began in the US.

Consumer spending

A resurgence in coronavirus cases and fresh curbs imposed by some states have hurt the labour market rebound and are denting the broader US economy. The US added just 245,000 jobs in November, and the unemployment rate is 6.7 per cent. Retail sales last month fell by the most in seven months at the start of the holiday shopping season, raising fears that consumer spending is slowing.

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Officials hope that Covid-19 vaccines that began to be administered in the US this week will help move the economy to a firmer footing. Still, it could be months until the jabs are widely distributed.

Federal Reserve

Until then, the burden to prop up the economy has fallen on the Federal Reserve and Congress. The Fed on Wednesday pledged to keep buying debt until "substantial further progress has been made" in the recovery, but its actions fell short of expectations for more forceful measures. Fed chair Jay Powell again stressed that fiscal stimulus was needed to more effectively support the economy in the coming months.

Congressional leaders continue to work towards a $900 billion (€735 billion) stimulus package, with a number of relief measures including benefits for self-employed and gig workers set to expire at the end of the month – just as state restrictions are expected to heap further pressure on the labour market. – Copyright The Financial Times Limited 2020