New weekly unemployment claims spiked far more than expected last week to reach a five-month high, as the coronavirus pandemic and stay-in-place orders weighed heavily on the labor market.
The U.S. Department of Labor released its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Jan. 9: 965,000 vs. 789,000 expected and a revised 784,000 during the prior week
Continuing claims, week ended Jan. 2: 5.271 million vs. 5.000 million expected and 5.072 million during the prior week
At 965,000, new jobless claims hit the highest level since August, ending what had been a tentative start of a downward trend in initial claims.
“The rise and level of new unemployment claims is shocking,” Mark Hamrick, Bankrate’s senior economic analyst, said in an email Thursday. “This reminds us that the economic crisis has not gone away, far from it, at a time when multiple crises have been vying for our attention.”
Heading into Thursday’s report, new initial unemployment claims were expected to dip below 800,000 for a third straight week. Initial jobless claims have stayed below the 1 million mark in every week since late August, after peaking at a record nearly 7 million in March.
“To put this in context the worst reading during the Global Financial Crisis was 665K, so the ongoing stress in the jobs market is clear for all to see. After a fall in employment in December we need to be braced for another decline in jobs in January,” James Knightley, ING chief international economist, said in a note Thursday. “There will be no real improvement in the jobs market until COVID containment measures are relaxed and businesses have the confidence to hire.”
By state, Illinois and Florida saw by far the greatest increase in unadjusted new jobless claims last week, with both states’ new claims increasing by more than 50,000. But the majority of U.S. states also posted increases in new claims, in a testament to the broad-based negative impact the pandemic was still exerting to employment across the country.
Continuing jobless claims, which measure the total number of individuals still receiving regular state unemployment benefits, also unexpectedly rose last week to a one-month high. And based on the latest report, more than 18 million Americans were still claiming unemployment benefits of some form, including about 11.6 million individuals on pandemic-era federal unemployment programs.
While both new and continuing jobless claims have eased significantly from their pandemic-era highs, both remain well above levels from before the pandemic, when new jobless claims were averaging at just over 200,000 per week and continuing claims were coming in well below 2 million. And last week’s December jobs report showed that the U.S. economy was still about 9.8 million payrolls short of its February levels, with a still-elevated unemployment rate and depressed labor force participation rate. Though the vaccine rollout and additional fiscal stimulus may have alleviated some of the pressure, some economists are bracing for a multi-year recovery in the labor market.
“The January 9 week is close enough to the payroll jobs survey period of the 12th of the month for us to guess there will be a second month of job losses after the 140K drop in payroll jobs in December as reported last Friday,” Chris Rupkey, chief financial economist for MUFG Union Bank, said in an email Thursday. “The economy faces immense challenges early in the new year as the upward trajectory of new coronavirus cases and state lockdowns is forcing employers to lay off workers.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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