Rise in US weekly unemployment benefit requests casts a shadow over economic recovery

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Rise in US weekly unemployment benefit requests casts a shadow over economic recovery




FILE PHOTO. People who lost their jobs wait in line to apply for unemployment benefits at an Arkansas Workforce Center in Fayetteville, Arkansas, USA.


© Reuters/NICK OXFORD
FILE PHOTO. People who lost their jobs wait in line to apply for unemployment benefits at an Arkansas Workforce Center in Fayetteville, Arkansas, USA.


By Lucia Mutikani

WASHINGTON, Oct 15 (Reuters) – The number of people filing new claims for unemployment benefits unexpectedly spiked last week, highlighting fears that the COVID-19 pandemic was inflicting lasting damage on the job market.

The Labor Department’s weekly claims report on Thursday, the most timely data on the health of the economy, also showed that at least 25 million people were on unemployment benefits at the end of September.

This reinforced views that the economic recovery from the recession was slowing and urgently needed another government bailout package for businesses and the unemployed.

The weakness of the labor market and the consequent economic damage are major obstacles to President Donald Trump’s options to win a second term in the November 3 elections. Democratic candidate Joe Biden has blamed government management during the coronavirus pandemic for the worst economic crisis in at least 73 years.

Initial claims for state unemployment benefits increased by 53,000 to a seasonally adjusted rate of 898,000 in the week ended October 10. The data for the previous week was revised to show 5,000 more applications than previously reported.

Economists polled by Reuters had estimated 825,000 applications in the last week.

Without seasonal adjustment, aid requests increased by 76,670 to 885,885 last week. Economists prefer the seasonally adjusted figure due to previous difficulties in adjusting the data amid seasonal fluctuations due to the economic hit caused by the coronavirus crisis.

With a seven-month pandemic already in the United States, initial applications remain well above the peak of 665,000 seen during the 2007-09 recession, although they are below the record of 6.867 million in March. About 3.8 million people permanently lost their jobs in September, with another 2.4 million unemployed for more than six months.

The report also showed that the number of unemployed receiving benefits after the initial week fell by 1.165 million to 10.018 million in the week to October 3. But economists believe so-called rolling claims drop as people are no longer eligible for benefits, which in most states are limited to six months.

(Report by Lucia Mutikani, Edited in Spanish by Manuel Farías)

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