WASHINGTON: The number of Americans filing new claims for unemployment benefits unexpectedly increased last week, supporting views the economic recovery from the Covid-19 pandemic was running out of steam amid diminishing government funding.
The weekly jobless claims report from the Labour Department on Thursday, the most timely data on the economy's health, also showed 26 million people were on unemployment benefits in early September. The faltering labour market recovery and a recent rise in new coronavirus infections has piled pressure on Congress and the White House to come up with another rescue package.
Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that Congress and the US central bank needed to "stay with it" in working to support the economy's recovery. More fiscal stimulus is looking increasingly unlikely before the Nov. 3 presidential election.
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 870,000 for the week ended Sept. 19. Data for the prior week was revised to show 6,000 more applications received than previously reported. Economists polled by Reuters had forecast 840,000 applications in the latest week.
Unadjusted claims increased 28,527 to 824,542 last week. Economists prefer the unadjusted claims number given earlier difficulties adjusting the claims data for seasonal fluctuations because of the economic shock caused by the coronavirus crisis.
Six months after the pandemic started in the United States, jobless claims remain above their 665,000 peak during the 2007-09 Great Recession, though applications have dropped from a record 6.867 million at the end of March.
A total 630,080 applications were received for the government-funded pandemic unemployment assistance last week. The PUA is for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs. Altogether, 1.5 million people filed claims last week.
The claims report also showed the number of people receiving benefits after an initial week of aid dropped 167,000 to 12.58 million in the week ending Sept. 12.
The Fed has cut interest rates to near zero and vowed to keep borrowing costs low for a while, and has also been pumping money into the economy. Government money to help businesses has virtually dried up. Tens of thousands of airline workers are facing layoffs or furloughs next month.
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