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WASHINGTON: New applications for US unemployment benefits surged last week by 137,000, according to government data released on Thursday, underscoring the need for more economic stimulus as Covid-19 cases hit new peaks.
The gain was far higher than economists had been expecting and ramps up pressure on US lawmakers to break the impasse on a new federal relief package to help families and businesses hit by the pandemic.
Talks have been going on for months, with no agreement and new proposals floated in recent days that have yet to win support from all sides.
With millions of unemployed workers faced with losing their benefits just after Christmas, Democrats and Republicans agree Congress cannot leave Washington without an agreement.
The massive rebound in unemployment applications was the biggest since March 28 in the early days of the coronavirus pandemic, and took the total number of initial claims to 853,000, the Labor Department reported.
Applications fell in the prior week which included the Thanksgiving holiday, and although economists had been expecting a rebound the consensus was for a much more modest increase.
Claims for special Pandemic Unemployment Assistance jumped 139,000 in the week ended Dec 5.
"The Thanksgiving holiday may still be wreaking some havoc with the data, but the underlying picture is still one of weak labor market conditions as the coronavirus surges," Nancy Vanden Houten of Oxford Economics said in an analysis.
For the week ended Nov 21, the holiday week, the total number of workers receiving some form of assistance, including from two pandemic emergency programmes, fell 1.1 million to 19 million, according to the report.
Those special programmes that provide extended benefits and help to workers who do not usually qualify for unemployment benefits, like gig workers, will expire by the end of the year unless lawmakers in Washington overcome their differences and agree on a new relief package.
The data confirm the recent weakening trend in the labour market as the world's largest economy deals with the world's worst coronavirus outbreak.
Job gains in November were disappointing, and nearly 11 million people remain unemployed since the start of the pandemic. Economists warn December could show a worsening picture.
"Given Covid-19 cases and deaths are now regularly setting new highs, these reports put into question job growth in December, especially given the rapid slowdown in growth in November," said Robert Frick of Navy Federal Credit Union.
Treasury Secretary Steven Mnuchin unveiled a US$916 billion proposal earlier this week that included extended unemployment benefits, some help for struggling state and local governments, liability protections for businesses, and US$600 cheques for all American taxpayers.
However, Democratic leaders say the White House plan falls short, and they remain focused instead on a US$908 billion (RM3.7 trillion) compromise plan introduced last week by a bipartisan group of legislators.
Congress has been deadlocked for months over passing a follow-up measure to the US$2.2 trillion CARES Act passed in March that was credited with preventing an even worse economic crisis.
The labour market distress is keeping inflation muted.
Inflation rose slightly more than expected in November but nowhere near enough for the Federal Reserve to shift from its zero-rate stance next week.
The Labor Department's consumer price index rose 0.2% last month, seasonally adjusted, a hair more than expected after remaining flat in October.
The increase was not driven by any item in particular, the report said, though some categories that declined sharply as the Covid-19 pandemic began continued to see prices recover.
The Fed in March slashed rates to zero as the pandemic struck, and later unveiled a new inflation-targeting policy that means rates will stay lower for longer to promote maximum employment.
No rate increase is foreseen before inflation nears the 2.0% mark.
Though the November CPI increase was slightly better than expected, Rubeela Farooqi of High Frequency Economics said it is not likely to last.
"Prices are likely to remain contained, especially in the near term, as demand comes under pressure from virus-combatting protocols and as capacity remains ample," she wrote in an analysis.
Prices for food away from home rose by 0.1%, helping to offset the 0.3 percent decrease in food at home.
Airline fares rose 3.5%, weaker than October but nonetheless a positive sign for the travel industry hard-hit by the pandemic.
Lodging costs rose 3.9% after declining sharply in October.
All told, inflation was up 1.2% over the last 12 months, not seasonally adjusted, while it was up 1.6% excluding food and energy. – Reuters, AFP
English (United States)