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New US jobless benefit claims drop to 1 mn in latest week

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Aug 28, 2020 - 08:13 AM

WASHINGTON — One million people in the United States made new claims for jobless benefits in the week ended August 22, the Labor Department said on Thursday, a slight improvement from the week prior.

The result was in line with expectations and a decrease of about 100,000 claims from the prior week, however the number of people filing under a special program providing benefits to workers normally ineligible increased by about 82,000 to 607,806 in the latest week.

The US has seen tens of millions of layoffs since mid-March when businesses shut down to stop the coronavirus, though the initial wave has decreased since its peak later that month.

While there have been signs of rehiring, the weekly claims data has yet to fall below the level seen in the worst week of the global financial crisis.

The Labor Department data showed the rate of continuing claims, which measures people actually receiving benefits, declining by 0.2 points to 9.9 percent in the week ended August 15, the latest period for which data was available.

The four-week moving average of new claims also ticked downwards to around 1.1 million, dropping about 107,000 in the week ended August 22.

All told, the data show 27 million people are still receiving some form of government assistance, a massive number.

And while Congress passed legislation early in the pandemic offering $600 in extra payments to the unemployed each week, that money ran out at the end of July and lawmakers have yet to agree on whether or not to extend it in a future bill.

“The decline in continuing claims for a fourth straight week is even more encouraging and is indicative of ongoing hiring, though it could also be reflective of individuals exhausting their benefits,” said Rubeela Farooqi of High Frequency Economics.

However she pointed to the continuing high rate of new filings as evidence that layoffs may be ongoing, reflecting an underlying weak economy that may persist far longer than anticipated.

“The return to pre-pandemic levels of prosperity is set to be an uncertain and prolonged process,” she said.

Separately, the Commerce Department released its second estimate of second quarter GDP, which encompassed the months when businesses were shutdown to stop COVID-19 before tentatively re-opening.

The new estimate shows GDP collapsing at an annualized rate of 31.7 percent, a slight improvement from the 32.9 percent initially forecast. But the figure was still the worst quarterly decrease since at least 1947.

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