The number of Americans filing for unemployment benefits increased for a second straight week, a sign the economic rebound is increasingly at risk with Congress poised to potentially let supplemental US$600 payments expire.
Initial claims through regular state programs rose to 1.43 million in the week ended July 25, up 12,000 from the prior week, a Labor Department report showed Thursday. There were 17 million Americans filing for ongoing benefits through those programs in the period ended July 18, up 867,000 from the prior week -- the largest increase since early May.
U.S. stock futures remained lower after the report, while 10-year Treasury yields extended declines. Economists in a Bloomberg survey had forecast 1.445 million initial claims, with projections as high as 1.6 million.
Almost five months into the pandemic, economic pain remains widespread, with the persistent jump in coronavirus infections and lack of a vaccine preventing a return to normal for the foreseeable future. Further challenges for Americans are in store should lawmakers allow the US$600 in extra federal weekly jobless benefits to expire this week; Democrats and Republicans have remained far apart in negotiations over extending the aid that has propped up consumers and businesses.
A separate report Thursday showed the U.S. economy shrank at a record 32.9 per cent annualized rate in the second quarter, pointing to the effects business closures and lost jobs are having on the broader economy.
“Even if the reopening goes well -- and many, many people go back to work -- it is still going to take a fairly long time for parts of the economy that involve lots of people getting together in close proximity” to recover, Federal Reserve Chairman Jerome Powell said Wednesday, after the central bank kept interest rates near zero. “Those people are going to need support.”
The Labor Department said its seasonal factors had assumed an unadjusted decline of about 181,000 initial claims; the count fell by about 171,000. That resulted in an increase of 12,000 after the department applied its seasonal adjustment.
The data showed initial claims in almost all states fell on an unadjusted basis last week. California -- the most populous state and a hotspot for the virus -- saw a 40,587 decline on an unadjusted basis, while Florida, Georgia, Louisiana and Texas also reported significant drops.
States with increases included Nevada, New Jersey, Virginia and Kansas.
The jump in continuing claims was concentrated in California and Texas, which reported a combined increase of about 576,000 on an unadjusted basis. Florida showed a decline of about 122,000.
States reported 829,697 people filed for Pandemic Unemployment Assistance, a federal program for those not eligible for regular state programs including independent contractors and self-employed Americans. That figure was down from the prior week.
And the total number of unadjusted continuing claims fell to 30.2 million three weeks ago from 31.8 million. This figure, though, has reflected overcounting of PUA applications as states clear backlogs.
--With assistance from Jordan Yadoo and Sophie Caronello.