US initial jobless claims fall by 33,000

Initial jobless claims in the US for the week ending Sept 12 fell 33,000 from the week before to 860,000, the US Labor Department reported Thursday.

Analysts surveyed by Dow Jones expected 875,000 new unemployment claims to be filed last week.

The recent drop in new claims is a huge improvement from the 6.9 million initial jobless claims filed in late March but unemployment remains significantly above the highest level prior to this year in records dating to the 1960s.

"The labor market may not be sinking, but it sure isn't getting any better," Chris Rupkey, chief financial economist for MUFG Union Bank in New York said in a research note.

Continuing claims, or those who previously filed and remain unemployed, fell by about 900,000 to 12.63 million. In May, continuing claims peaked at 24.9 million.

The four-week moving average for continuing claims, intended to smooth out spikes and provide a more accurate view of the job market, fell by 532,750 to 13.5 million.

In August, US employers added 1.4 million jobs and the unemployment rate fell to 8.4 percent. Unemployment was in the mid-three percent range prior to the pandemic, a 50-year low, the Labor Department said.

Overall, employers have re-hired about 11 million of the 22 million workers who lost their jobs in March and April when the economy was largely shut down in an effort to curb spread of the coronavirus.

But the pace of hiring slowed late this summer, and layoffs, while below prior levels this year, have remained steady at about 900,000 a week, government statistics show.

Initial jobless claims had totaled more than 1 million a week through late August.

Earlier this month, the Labor Department modified the way it calculated seasonal adjustments to better track the effect of the coronavirus. As a result, there isn't a one-to-one comparison of current numbers with last summer.

But hiring may not explain all of the decline in continuing claims because unemployment benefits are running out for some workers, analysts said.

Many states provide a maximum of six months in unemployment benefits. Some people who applied in March are losing the weekly check as benefits expire.

Congressional Democrats and Republicans haven't agreed on another round of stimulus. An extra $600 a week in unemployment benefits expired July 31.

Democrats say the increased benefit is needed to help unemployed workers pay their bills, but Republicans believe the extra money is a disincentive to return to work and therefore will slow the recovery.

A $300 weekly supplement to unemployment payments is starting to reach recipients, but it won't be of any help to the newly jobless because the program that created the payments had enough money only until Sept 5.

The program, known as Lost Wages Assistance, was created last month by President Donald Trump using federal disaster funds after Republicans and Democrats were deadlocked on a second relief bill.

The payments — half the amount of the federal supplement that expired at the end of July — are retroactive to the week that ended Aug 1.

Self-employed workers haven't been covered by unemployment insurance in the past, but a new program now covers as many as 14 million, the Labor Department said.

The Pandemic Unemployment Assistance program, open to those not previously eligible for unemployment benefits, fell 209,577 to 658,737.