US jobless claims slip but rebound loses steam
The number of Americans making new jobless claims fell slightly last week, but stayed at a very high level in a sign that the jobs recovery is losing steam.
New jobless claims came to 860,000 in the week to 12 September, the Labor Department said today. That was down from 893,000 the week earlier, although it was far higher than anything seen before coronavirus.
Weekly jobless claims peaked at 6.9m at the end of March as states locked down and business shut their doors. The unemployment rate rocketed to 14.7 per cent in April.
Since then, the US economy has added millions of jobs, bringing the unemployment rate down to 8.4 per cent in August.
Nonetheless, the jobs recovery has shown signs of slowing. New weekly jobless claims have hovered around 1m since the start of July.
Republican and Democrat lawmakers remain at loggerheads over the next round of stimulus, despite economists warning the economy is in need of more spending.
The US Federal Reserve yesterday warned that coronavirus “will continue to weigh on economic activity, employment, and inflation in the near term”. It said Covid also “poses considerable risks to the economic outlook over the medium term”.
Nancy Vanden Houten, economist at consultancy Oxford Economics, said: “Layoffs remain widespread and an historically high number of individuals are still receiving some type of jobless benefits.”
“Failure on the part of policymakers to enact another fiscal relief package poses significant downside risks,” she said. “The recovery appears to be losing momentum.”
Ronald Temple, head of US equity at Lazard Asset Management, said: “The total number of unemployed Americans is not declining.”
“The climb out of the pandemic downturn is likely to be slower and more damaging to long-term growth than it should have been.”