US jobs market recovery continues to stall as COVID surges

The number of Americans filing new applications with states for unemployment benefits edged down slightly last week but remains stubbornly high as COVID-19 restrictions continue to hobble the United States jobs market recovery.

The number of Americans filing new applications with states for unemployment benefits edged down slightly last week but remains stubbornly high as COVID-19 restrictions continue to hobble the United States jobs market recovery.

Some 787,000 people filed initial jobless claims last week, a fall of only 3,000 from the previous week’s level, the US Department of Labor said on Thursday.

While weekly jobless claims – a proxy for layoffs – are well off their pandemic highs, they are still nearly four times greater than pre-pandemic levels, signalling that the labour market still has a lot of healing to do.

“While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then, and we expect claims to remain elevated,” Nancy Vanden Houten, lead US economist for Oxford Economics, wrote in a note to clients.

The total number of workers collecting benefits from states – a metric known as “continuing claims” –  fell by 126,000 in the week ending December 26 to 5.07 million.

Throw in federal programmes, and the number of jobless workers collecting benefits fell by more than 400,000 in the week ending December 19 to 19.176 million.

Part of that decline was due to federal jobless benefits lapsing before they were renewed again as part of the $900bn stimulus deal that was signed into law on December 27.

The raft of new coronavirus relief measures includes a $300 weekly federal top-up to state unemployment benefits and provisions allowing laid-off workers who qualify to claim up to 24 weeks of federal unemployment benefits after they’ve exhausted state aid.

A more comprehensive picture of the nation’s labour market is due to be released on Friday with the December jobs report. Economists are expecting a disappointing reading due to COVID-19 fallout.

The jobs market still has a lot of lost ground to make up.

Of the 22 million jobs lost to lockdowns in March and April last year, only a little more than 12 million have been recovered.  And while the nation’s unemployment rate edged down to 6.7 percent in November, it fell because fewer people were actually looking for a job.

Other economic metrics are also signalling that the recovery is losing steam.

Retail sales posted their steepest decline in seven months in November as surging COVID-19 infections ushered in more business-sapping restrictions to curb the spread of the virus.