The number of Americans filing new claims for unemployment benefits hovered around 1 million last week, suggesting the labor market recovery was stalling as the Covid-19 pandemic drags on and financial aid from the government dries up.
Initial claims for state unemployment benefits totalled a seasonally adjusted 1.006 million for the week ended August 22nd, compared to 1.104 million in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 1 million applications in the latest week.
The reopening of businesses in May helped to pull down claims from a record 6.867 million in March, when nonessential establishments were shuttered in an effort to slow the spread of the coronavirus. Claims dropped below 1 million early this month for the first time since the pandemic started in the United States.
Though new Covid-19 infections have subsided after a broad resurgence through the summer, many hot spots remain, especially at college campuses that have reopened for in-person learning.
Businesses have exhausted government loans to help with wages, while a weekly unemployment supplement expired in July. Economists attributed a sharp rebound in activity to the government’s financial support and some are dialing back lofty growth estimates for the third quarter.
A separate report from the Commerce Department on Thursday confirmed the economy suffered its deepest contraction in at least 73 years in the second quarter. Gross domestic product plunged at a 31.7 per cent annualised rate last quarter, the government said in its second estimate. That was revised from the 32.9 per cent pace reported last month.
The economy slipped into recession in February.