New US jobless claims back above 1m after surprise jump
The number of Americans making new jobless claims jumped unexpectedly back above the 1m mark last week, in a worrying sign for the US economy.
The total claims of 1.11m in the week ending 8 August were 135,000 higher than the previous week’s total of 971,000, the Department of Labor said. And the figure was well above economists’ expectations of a fall to 925,000.
It comes as Republicans and Democrats remain at loggerheads over the next round of government stimulus.
Today’s figures, the latest sign that the US’s economic recovery is stalling, will add urgency to the talks. Yesterday the US Federal Reserve warned coronavirus “was posing considerable risks to the economic outlook over the medium term”.
However, there was a glimmer of light in the number of continuing claims – those claiming ongoing support – falling to 14.8m. That was the lowest since early April.
Only last week US policymakers were cheering figures that showed new jobless claims dropping below 1m for the first time since 21 March.
Claims peaked at a record 6.87m in late March, shocking economists with a figure far higher than anything seen before. They dropped off in May, however, as the US jobs market made a surprising recovery.
Rising coronavirus cases hurt US recovery
But a surge in coronavirus cases in July dented the rebound. The US economy added 1.8m jobs in July but the rate of job creation slowed and 16.3m Americans remained without work.
Today’s figures will be worrying for the Trump administration. President Donald Trump is fighting for reelection in November but is well behind Democratic rival Joe Biden in the polls.
Trump had originally planned to fight the election on the economy, with a focus on low unemployment. But coronavirus has left this plan in tatters.
Richard Flynn, UK managing director at investment firm Charles Schwab, said the figures will also disappoint the market.
“While hard-hit industries brought workers back in July, the level of weakness remains unprecedented,” he said.
“The impact of virus-related rolling shutdowns could continue to reverse some of that improvement.”
However, judging by recent trends, markets appear unfazed by the dire state of the US economy. The S&P 500 yesterday hit an all-time high and Apple became the first company to reach a $2 trillion (£1.53 trillion) market valuation.