US jobless claims fall to seven-month low but pace of decline slows
The number of Americans filing new claims for unemployment benefits dropped to a seven-month low last week, official figures showed, but the rate of decline in jobless claims slowed.
Initial claims for state unemployment benefits hit a seasonally adjusted total of 709,000 for the week to 7 November, the US Department of Labor said.
This compares to a total of 757,000 for the previous week, and marks the fourth straight week of declines.
Economists polled by Reuters had forecast the latest application total to hit 735,000.
Although jobless claims dropped to their lowest level since March, they remained above the peak of 665,000 hit during the global financial crisis.
Weak demand, especially in the services sector, is forcing US employers to shed workers, while the pace of layoffs could accelerate as new Covid-19 cases surge across the country.
Daily new Covid-19 infections in the US are topping 100,000 while hospitalisations spike as cooler weather draws people indoors, prompting some state and local governments to impose new restrictions on businesses.
US unemployment claims peaked at a record 6.867 million in March. Much of the improvement in the labour market came from businesses recalling laid off and furloughed workers as companies and the unemployed accessed their share of more than $3 trillion in coronavirus relief measures issued by the US government.
However that fiscal stimulus has now run out, which will make it harder for the economy to generate enough jobs to absorb millions of unemployed Americans.
US Nonfarm payrolls rose by 638,000 jobs in October – the smallest gain since the jobs recovery started in May. Only 12.1 million of the 22.2 million jobs lost in March and April have been recovered.
The country’s frail labor market is one of the major challenges faced by President-elect Joe Biden when he takes over from President Donald Trump in January.
“Today’s continued decline in US jobless claims will be welcome news for investors, although it is too soon to tell how the election outcome may impact the state of the labour market longer term,” said Richard Flynn, UK managing director at Charles Schwab.
“Markets continue to be confident that more economic stimulus is coming—it’s just a question of whether that comes in the post-election November/December time frame, or early in 2021,” he continued.
“While there is currently bipartisan support for more fiscal stimulus, the two sides remain far apart on the details, and a divided Congress may not be able to bridge that divide.”