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The numbers: New applications for unemployment benefits fell to a three-week low of 803,000 right before Christmas, but the relatively high level still reflected a fresh wave of layoffs tied to the record COVID-19 outbreak.
Initial state jobless claims sank by 89,000 to 803,000 in the seven days ended Dec. 19, the Bureau of Labor Statistics said Thursday.
Economists polled by MarketWatch had forecast initial jobless claims to total a seasonally adjusted 875,000.
New jobless claims had slid to a pandemic low of 711,000 in early November before the record coronavirus surge spawned another spate of layoffs.
Another 397,511 applications for benefits were filed last week through a federal-relief program created during the pandemic, putting the total number of new claims at 1.27 million.
Congress voted to extend the federal program earlier this week and added more money to the pot, though President Trump hasn’t signed it yet. Benefits could been cut off for millions of unemployed Americans if the bill isn’t signed before the end of the year.
While jobless claims have correctly reflected the rise and decline in unemployment during the pandemic, a government watchdog agency also found the number of distinct individuals applying for or collecting benefits has been inflated by fraud, double counting and other problems.
Read: Jobless claims inflated, GAO finds
The Bureau of Labor Statistics plans to take steps to improve the data, but for now the claims report is not considered entirely accurate. Economists say to pay attention to the direction of claims instead of the totals.
Read: Why the inaccurate jobless claims report is still useful to investors
What happened: Initial claims fell the most in California, New York and Ohio, offsetting increases in Illinois and Virginia.
The number of people already collecting state jobless benefits, known as continuing claims, fell by 170,000 to a seasonally adjusted 5.34 million in the week ended Dec. 12. XXXX That’s a new pandemic low.
A sizable number of the people who’ve run out of state benefits, however, have shifting to a temporary federal-aid program because they still can’t find work.
Continuing claims funded by a temporary federal program increased by an unadjusted 8,178 to 4.8 million in the week ended Dec. 5, the latest data available.
Applications for federal unemployment benefits have more than tripled since August. Economists say it’s a sign of rising long-term unemployment that might not be easy to undo once the pandemic ends.
The number of people receiving benefits from eight separate state and federal programs, meanwhile, was reported at an unadjusted 20.36 million as of Dec. 5. That was little changed from the prior week.
Those numbers are also under dispute, though. The government’s more comprehensive monthly jobs report indicated that a far smaller 10.7 million people were unemployed at the end of November.
Economists say the true number of unemployed is probably in the middle.
Big picture: New government restrictions on business aimed at limiting the spread of the virus triggered another round of layoffs toward the end of the year and discouraged companies from hiring. It’s possible the labor market could shrink in December for the first time since the height of the pandemic in April.
Read: Retail sales sink 1.1% in November as COVID-19 slams restaurants and economy
The newly extended and enhanced unemployment benefits approved by Congress is designed to help tide people over until the coronavirus vaccines become more widespread and the economy begins to return to a semblance of normalcy.
Read: U.S. consumer confidence tumbles in December
The process could take at least several months, however, and the economy is likely to struggle until the pandemic starts to fade.
See: MarketWatch Coronavirus Recovery Tracker
What they are saying? ” While an easing of the pandemic is in view as the coronavirus vaccine comes online, the health situation is likely to remain dire for a few more months at least, weighing on the labor market and the economy more broadly,” economists Nancy Vanden Houten and Gregory Daco of Oxford Economics wrote in a note to clients.
Market reaction: The Dow Jones Industrial Average DJIA, -0.67% and S&P 500 SPX, -0.21% were set to open higher in Wednesday trades.
