US jobless claims rise to 1.4 million as coronavirus cases surge

Spike in workers filing for state unemployment benefits last week marks first rise in nearly four months.

US jobless
Some 1.416 million Americans filed for state unemployment benefits in the week ending July 18 - an increase of 109,000 over the previous week's revised figure [File: Nati Harnik/The Associated Press]

Signs of trouble are surfacing in the United States labour market as coronavirus cases surge across large parts of the country, with government data on Thursday showing that the number of Americans filing initial jobless claims rose for the first time in nearly four months.

Some 1.416 million people filed for state unemployment benefits in the week ending July 18 – an increase of 109,000 over the previous week’s revised figure, the Bureau of Labor Statistics reported.

Initial jobless claims are a proxy for layoffs and the trend higher signals that employers are furloughing workers as rising COVID-19 infections prompt states and cities across the country to pause or reverse the rollback of lockdown restrictions.

More than a dozen states saw initial applications for unemployment benefits move higher last week. California – one of many states imposing new restrictions in response to rising infections – recorded the highest number of initial jobless claims with 292,673 people filing – 7,759 more than the previous week. 

So-called “continuing claims” reflecting the number of people receiving benefits through state jobless programmes trended down by 1.1 to 16.19 million. That data lags initial claims by a week.

“The continuing claims figures suggest some rehiring is occurring, but the initial claims data suggest we might see some pause in that activity,” Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients.

The total number of people collecting unemployment benefits from both state and federal programmes trended down to 31.8 million for the week ending July 4 – a decrease of more than 200,000 from the previous week. 

The spike in initial jobless claims is yet another sign of deepening insecurity for the nation’s unemployed workers.  Data from job site Glassdoor revealed that after a brief bump in early June, job openings in the US started trending downwards.

And tens of millions of jobless Americans are about to see their incomes slashed with the $600 federal top-up to weekly unemployment benefits set to expire at the end of this week.

Congress is debating the size and scope of a new round of virus relief aid. Republicans are pushing for a $1 trillion package, while Democrats in the House of Representatives passed a $3 trillion package two months ago. 

On Thursday, the White House announced it had papered over differences with Senate Republicans to hammer out a tentative blueprint that includes extending the federal weekly top-up, but at a lower rate – dramatically lower in some cases. 

US Treasury Secretary Steven Mnuchin told business news network CNBC that the federal top-up Republicans are proposing would be, “based on approximately 70 percent of wage replacement”.

Source: Al Jazeera