WASHINGTON: The number of Americans filing new applications for unemployment benefits decreased further last week, suggesting the labour market was stabilizing as authorities started to loosen pandemic-related restrictions on businesses.
Despite the signs that layoffs are abating, the weekly jobless claims report from the Labour Department on Thursday showed at least 17.8 million Americans were on benefits in mid-January, indicating that long-term unemployment was likely becoming entrenched. That could boost President Joe Biden’s push for the US Congress to pass his $1.9 trillion recovery plan.
Treasury Secretary Janet Yellen told ABC’s Good Morning America that the massive stimulus plan was needed to overcome the economic pain caused by the COVID-19 pandemic.
“It’s too early to predict that this begins a strong reversal of excruciatingly high layoffs,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Another round of stimulus is important.”
Initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 779,000 for the week ended Jan. 30.
That was the third straight weekly decline. Economists polled by Reuters had forecast 830,000 applications for the latest week.
Unadjusted claims decreased 23,525 to 816,247 last week. Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.165 million people filed claims last week, down from 1.243 million in the prior period.
Claims remain above their 665,000 peak during the 2007-2009 Great Recession, but well below the record 6.867 million last March when the pandemic hit the United States.
Part of the elevation in claims reflects people re-applying for benefits after the government in late December renewed a $300 unemployment supplement until March 14 as part of a pandemic relief package worth nearly $900 billion.
Though January was the worst month since the onset of the pandemic, the decline in economic activity levelled off in the second half of the month amid signs of a peak in the recent coronavirus wave. Data from Homebase, a payroll scheduling and tracking company, showed its measure of employees at work flattened out over the last two weeks of January, pausing the decline observed from December into January.
Other data on Thursday from global outplacement firm Challenger, Gray & Christmas showed planned job cuts announced by US-based employers rose only 3.3% to 79,552 in January.
The claims report also showed the number of people receiving benefits after an initial week of aid dropped 193,000 to 4.592 million during the week ended Jan. 23. About 17.836 million people were on unemployment benefits on all programs in mid-January, down from 18.322 million in the first week of 2021.
According to a Reuters poll of economists payrolls likely increased by 50,000 jobs in January after declining by 140,000 in December. In the wake of the fairly upbeat reports, Goldman Sachs lifted its payrolls forecast by 75,000 to 200,000.
But some economists are bracing for a second straight month of job losses in January. The Conference Board’s survey last week showed consumers’ perceptions of labour market conditions deteriorated further last month.
The economy has recouped 12.5 million of the 22.2 million jobs lost in March and April. The Congressional Budget Office estimated on Monday that employment would not return to its pre-pandemic level before 2024.
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