Claims for unemployment benefits in the United States decrease unexpectedly, remain high

Photographer: Luke Sharrett

US unemployment benefit claims fell unexpectedly to a one-month low, although recent increases in coronavirus cases and company closings threaten to keep dismisss high until the beginning of 2021.

Initial claims for unemployment benefits in regular state programs dropped by 19,000 to 787,000 in the week ending December 26, according to a Labor Department report on Thursday. That was less than the median estimate of 835,000 in a Bloomberg survey of economists. The numbers are often volatile around the holidays and last week included Christmas. Without adjustments, claims fell by 31,736.

Continued requests for state programs, which roughly correspond to the total number of people receiving state unemployment benefits, also declined, to 5.22 million in the week ending December 19. Economists projected an increase to 5.37 million.

Highlighting the damage of the pandemic to the labor market as 2020 comes to an end, claims for benefits average an average of 1.45 million a week this year, compared with about 220,000 in 2019.

The surprising decline in claims is a welcome sign, although the level remains high as the economic consequences of the coronavirus continue to reverberate. While the a stimulus package recently signed into law should cushion the blow to further shutdowns and closures, it may take some time for funds to reach consumers and, without a widely available vaccine, it is only a temporary measure.

What Bloomberg’s Economy Says

“The lack of a clearer leap in new layoffs in response to broader activity restrictions in some areas is comforting. Even so, the rate is still high and long-term unemployment is the most important problem, highlighting the importance of recent fiscal relief. “

– Andrew Husby, economist

For the full note, click here

The S&P 500 fell early in the trading session, while the 10-year Treasury yield and the dollar changed little.

Illinois Decline

Illinois, which reported a drop of more than 28,500 claims from the previous week, was responsible for most of the overall decline in unadjusted claims. Pennsylvania, Georgia and Texas also recorded considerable declines in records. New York and California, among the states with the most restrictions related to the pandemic, reported increases in claims for unemployment insurance.

Still, an acceleration in the number of unemployment insurance claims in the first half of December highlights economists’ expectations for a worsening job market in winter, as the colder climate forces restaurants and retailers to close or cut hours, while an increase in Covid-19 cases leads to tougher measures in several states.

The December job report, released next week, is expected to be on the weaker side. Economists predict a gain of about 70,000 jobs, the lowest since April, when the payroll fell. Several analysts predict that the number of employees has decreased.

In addition to regular state claims, more than 308,000 initial applications were made last week under the Pandemic Unemployment Assistance program, which provides funds for those who do not qualify for state programs, such as concert workers. In total, 8.46 million benefit weeks were claimed for this program in the period ended December 12.

There were also 4.77 million total weeks of claims in Pandemic Emergency Unemployment Compensation, a separate program that provides additional weeks of benefits to Americans who have exhausted the state’s regular program.

– With the help of Chris Middleton and Sophie Caronello

(Adds a comment from Bloomberg Economics)