Jobless claims in the USA rose last week as hiring stalls

Marco Green
October 19, 2020

Note: The state of California has announced a two-week pause in its processing of initial claims for unemployment insurance benefits.

Applications for U.S. state unemployment benefits unexpectedly jumped last week and more Americans moved to longer-term aid, underscoring a recent slowing in the pace of the labor market's recovery.

Government-imposed restrictions meant to slow the spread of COVID-19 continue to wreak havoc on the economy and the labor market.

However last week, new jobless claims in America rose to 898,000, according to Thursday's Labor Department report that shows a slowing in hiring in an economy that still has roughly 10.7 million people who are unemployed.

State claims are up almost 11,000 from the prior week, and mark the fourth straight week that first-time filings have gone up in the commonwealth. Over the same period, continuing claims in all federal programs have trended higher, reaching 14.528 million for the week ending September 26.

Without the extra benefits, he noted, most claimants would only receive around $200-$300 a week, though the amount varies significantly by state. Questions remain about how much the data is affected by a couple of complicating factors, including issues with fraud, which have lead the state of California to pause reporting its data, backlogs and process quirks that require people to apply for traditional unemployment and get rejected before applying for PUA. Initial claims jumped in states including Indiana, Illinois, Massachusetts, Georgia and Washington. While the economy did see more jobs created over the summer, this hiring is slowing and stalling as winter approaches. "The recovery in the labour market will continue to slow down as the economy and the job market can not operate at full capacity until a vaccine is widely available", said Bloomberg Economist Eliza Winger.

About 3.8 million lost their jobs permanently in September, while 2.4 million remained unemployed for more than 6 months.

Most states offer 26 weeks of benefits. Federal Pandemic Unemployment Compensation (FPUC) provided $600/week to everyone eligible for unemployment for the weeks of April 4 through July 25.

However, with less than three weeks until the November 3 presidential election, an agreement is increasingly in doubt, adding risks that declining income will weigh on consumer spending.

The number of Americans who joined the unemployment line last week rose to 898,000, keeping new jobless claims consistently above the peak set during the financial crisis.

Separate from the headline number, initial applications for Pandemic Unemployment Assistance, or the federal program that provides jobless benefits to those not typically eligible like the self-employed, totaled 372,891 in the week ended October 10, a decrease from the prior week. In total, 11.2 million were claiming benefits through the program in the week ended September 26.

Other reports by Click Lancashire

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