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US weekly unemployment claims surge to 853k amid Covid restrictions

Weekly jobless claims surge to 853,000 as states impose new pandemic restrictions on businesses leading to fresh rounds of layoffs

  • For the week ending December 5, 853,000 people filed initial jobless claims
  • It is the highest level of claims since September 18, up 137,000 from last week
  • Comes as states impose harsh new restrictions as coronavirus cases rise 
  • New strict stay-at-home orders went into effect in California earlier this week 

New claims for unemployment insurance have risen more than analysts expected, as states implement new restrictions on business in the coronavirus pandemic.

For the week ending December 5, 853,000 people filed initial jobless claims, up 137,000 from the previous week’s revised level, according to data released on Thursday by the Labor Department. 

It is the highest level of new claims since September 18, and comes as the U.S. battles a fresh wave of coronavirus infections, with the number of confirmed cases crossing the 15 million mark on Tuesday.

New strict stay-at-home orders went into effect in California earlier this week, affecting about three-quarters of the nearly 40 million people in the nation’s most-populous state.

New jobless claims hit their highest level since September amid new lockdowns

A an empty restaurant is seen along the Embarcadero in San Francisco on Monday as the city enters a shelter-in-place order, closing all outdoor dining until January 4

A an empty restaurant is seen along the Embarcadero in San Francisco on Monday as the city enters a shelter-in-place order, closing all outdoor dining until January 4

Other states and local governments have also imposed restrictions on businesses, which economists expect to lead to a fresh round of layoffs during winter, especially without additional pandemic relief money from the government.

The total number of people who are receiving state-provided unemployment aid rose for the first time in three months to 5.8 million, the government said, from 5.5 million. That suggests that some companies have sharply pulled back on hiring.

All told, more than 19 million people are still dependent on some type of unemployment benefit.

A deal on another rescue package remained elusive on Wednesday, with Senate Majority Leader Mitch McConnell saying Congress was still looking for a way forward.

More than $3 trillion in government pandemic relief helped millions of unemployed Americans cover daily expenses and companies keep workers on payrolls. The fiscal stimulus has almost dried up.

Weekly new jobless claims (top) and continuing unemployment claims (bottom) are seen

Weekly new jobless claims (top) and continuing unemployment claims (bottom) are seen

A picnic area in Topanga State Park is closed after a shutdown order on Monday in California

A picnic area in Topanga State Park is closed after a shutdown order on Monday in California

Though a government watchdog found the claims data is inaccurate because of people filing multiple claims, processing backlogs and fraud, it is broadly in line with other labor market data that have suggested a slowing in the recovery after a burst of hiring during summer.

Jobless claims hit a record 6.867 million in March. Since then they have been stuck above their previous peak of 665,000 during the 2007-09 Great Recession.

The government reported last Friday that the economy created 245,000 jobs in November, the smallest gain in nonfarm payrolls since the jobs recovery started in May and the fifth straight monthly slowdown in employment growth. 

Only 12.4 million of the 22.2 million jobs lost in March and April have been recovered.

Labor market distress is keeping inflation muted. In a separate report on Thursday, the Labor Department said its consumer price index rose 0.2 percent in November after being unchanged in October.

In the 12 months through November, CPI increased 1.2 percent after a similar gain in October. Economists polled by Reuters had forecast the CPI edging up 0.1% in November and rising 1.1% year-on-year.

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