US unemployment claims drop sharply in latest week

WASHINGTON: New applications for US jobless benefits plunged by 48,000 last week, a far bigger drop than analysts were expecting, taking the level down to 709,000, the Labor Department reported Thursday.

That decline pushed the weekly level to its lowest point since mid-March, at the start of the pandemic, and took the four-week average through November 7 down to 755,250, seasonally adjusted, a drop of 33,250 from the prior week, according to the data.

Economists have been warning that recent improvements in labor markets could stall amid rising Covid-19 cases and the fallout from the pain inflicted by the pandemic, which has led to tens of thousands of layoffs by corporations, including airlines, as well as shutdowns of smaller businesses unable to survive any longer.

But the improvement was more than four times the decline analysts projected, though it occurred during the week of the fraught US presidential elections marked by the days-long vote counts.

Nancy Vanden Houten of Oxford Economics warned that the "positive trend continues to be partly offset by the rise in the number of unemployed individuals who have exhausted those benefits, evidence of more long-lasting labor market scarring."

The data still paint a fairly grim picture of the jobs outlook, as the weekly total was more than three times higher than the same week of 2019.

There were still nearly 300,000 people receiving benefits last week under the special program offered during the pandemic to workers who otherwise would not qualify for help.

Through October 24, more than 21 million people were still receiving some form of unemployment benefit, and many of those are special programs that are set to expire.

"This risk going forward is from spiking Covid-19 outbreaks that could result in business closures," said Rubeela Farooqi of High Frequency Economics, noting that "the labor market remains under stress and is far away from a complete recovery."

In a separate report, the Labor Department showed inflation remains largely absent in the US economy, with the consumer price index (CPI) unchanged in October compared to September, and up just 1.2 percent over the last 12 months, a decline from the prior month.

Food prices rose 0.2 percent, while energy edged up 0.1 percent, as gasoline dropped 0.5 percent but electricity jumped 1.2 percent, according to the report.