The number of Americans seeking unemployment benefits fell for a second week while remaining elevated, as the labor market makes scant progress amid risks of further weakness without additional federal stimulus.
Initial jobless claims in regular state programs decreased by 9,000 to 840,000 in the week ended Oct. 3, with the prior week’s figure revised higher by 12,000, Labor Department figures showed Thursday. Continuing claims, the total number of Americans on state benefit rolls, fell to 11 million in the week ended Sept. 26, a bigger-than-expected drop.
Even so, seven months into the pandemic, initial claims are still about four times the pre-virus level, and higher than the peak of the 2007-09 recession. For the latest week, economists expected initial claims of 820,000 and for continuing claims of 11.4 million, according to median estimates in a Bloomberg survey.
The report came with the same major caveat as last week: The figures from California, the most populous state, used numbers identical to the previous week because the state temporarily halted acceptance of new applications for two weeks to improve its systems and address a backlog of filings.
What Bloomberg’s Economists Say
“The stubbornly high level of claims may already be starting to reflect the large corporate job cuts announced last week. The report continued to exclude California’s numbers as the state put applications on hold for two weeks, announced on Sept. 19, to revamp its system.”
– Eliza Winger (Bloomberg)
The slight drop in new claims underscores the gradual improvement that the labor market has seen since the initial lockdowns of the pandemic eased. Even so, recent layoff announcements from companies including Walt Disney Co. and Allstate Corp. as well as multiple airlines could start showing up in the numbers in the coming weeks.
At the same time, President Donald Trump’s mixed messages on additional federal stimulus have fueled more uncertainty across the world’s largest economy as Federal Reserve Chair Jerome Powell warns it will face longer-lasting scars and a weak recovery without sufficient aid.
“Even as filings are declining, levels remain extraordinarily high,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note. “Employment growth has already slowed and without fiscal support that protected jobs, risks are skewed to the downside for payrolls going forward.”
U.S. stocks opened higher after the jobless claims report, while 10-year Treasury yields and the dollar both fell.
The confusion comes as unemployment persists for many Americans. While continuing claims fell by 1 million, that could reflect recipients exhausting regular benefits and moving to state programs that provide extended benefits. Also, the number of Americans transitioning onto Pandemic Emergency Unemployment Compensation — a federal program for people who have exhausted state benefits — increased by 153,700 to 1.96 million in the week ended Sept. 19.
The biggest increases in new unemployment claims on an unadjusted basis were in Florida, Illinois, Virginia and Massachusetts, which may reflect cuts at major airline hubs. New Jersey, Pennsylvania, Louisiana and Michigan saw declines.
The total number of Americans claiming Pandemic Unemployment Assistance — a federal program for self-employed and gig workers — decreased by 433,500 to 11.4 million in the week ended Sept. 19, while initial filings dropped by 44,270 last week to about 464,400.
– By Olivia Rockeman (Bloomberg)
– With assistance from Edith Moy, Vince Golle and Sophie Caronello.
