The first claims for unemployment insurance changed little last week, despite other indicators that the labor market weakened in late 2020.
Weekly complaints totaled 787,000 in the week ending January 2, the Labor Department said on Thursday. That was less than the Dow Jones estimate of 815,000 and a slight decrease from the revised total above 790,000 the previous week.
The report also showed a decrease of 126,000 continuous claims, bringing the total to 5.07 million. Those receiving benefits from all programs also fell, dropping from 420,000 to 19.2 million.
Complaints remain well above pre-pandemic levels, as a steady increase in Covid-19 cases has caused economic restrictions in states and municipalities across the country.
On Wednesday, ADP reported that private hires were contracted for the first time since April as the companies lost 123,000 in December. This count showed that almost all layoffs occurred in large companies and in the hospitality sector, as hotels, restaurants and bars were particularly affected by the winter’s resurgence in the pandemic.
“A combination of Covid’s fear and the state-imposed restrictions on activity in the service sector is squeezing businesses, and no real relief is likely until a sustained decline in pressure on hospitals appears; this is probably a story to the end February at the very least, “wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The number of weekly claims comes one day before the closely watched non-farm payroll report.
The Department of Labor is due to report on Friday that the US economy created only 50,000 jobs as the tumultuous 2020 came to an end, while the unemployment rate is seen rising to 6.8%, according to Dow Jones estimates. .
Even amid the likelihood that hires have declined with the end of the year, the four-week moving average for claims has continued to decline, dropping last week to 818,750. The labor market, however, continues to be in a deep crisis, since the four-week average of the previous year was 219,750.
At the state level, Illinois reported by far the largest drop in claims, with 62,765, according to unadjusted data. Several states have shown gains of more than 10,000, including Colorado, Georgia, Kansas, Virginia and Texas.
Even with the drop in hiring, the fourth quarter is expected to show considerable growth.
The GDP activity tracker now from the Federal Reserve of Atlanta is pointing to an 8.9% gain in gross domestic product amid increases in consumption and investment.