US jobless claims rise for first time in four months as coronavirus spreads
The number of Americans making new jobless claims climbed last week for the first time since the economy began to crash at the end of March, in a sign the US’s recovery is cooling off.
Slightly more than 1.4m Americans made a new jobless claim last week, up 109,000 from the week before. It was worse than economists had expected and was the first rise since the week ending 28 March, when claims peaked at an astonishing 6.8m.
It came as the US continued to rack up huge numbers of new coronavirus cases. The US is nearing 4m cases and a number of states are consistently setting new records.
California suffered a record number of cases and deaths yesterday. Alabama, Idaho and Texas reported record daily deaths, according to the New York Times’s database.
The US economy has been hit hard by coronavirus but looked as though it was starting to recover in May.
Markets rallied in early June when the unemployment rate dropped to 13.3 per cent in May from 14.7 per cent in April. It confounded analysts who had predicted the rate would surge to 20 per cent.
Yet there have been signs over the last few weeks that coronavirus was derailing the recovery. States such as California, Florida and Texas rolled back some of their easing of coronavirus restrictions.
New jobless claims had been steadily decreasing. However, they had plateaued in the last few weeks before today’s rise.
“With coronavirus hotspots flaring up around the country and some businesses pausing or rolling back their grand re-opening, key parts of the U.S. economy are still ailing,” said Richard Flynn, UK managing director at Charles Schwab.
The US government and Congress are currently informally debating the next round of economic stimulus.
Reports yesterday suggested Republicans are close to finalising their offer to Democrats. Analysts expect a stimulus deal worth at least $1 trillion (£790bn).
“A further boost to the economy from fiscal policy should help support consumption and employment,” Flynn said.