After a brief reprieve due to seasonal hiring, the latest weekly initial jobless claims total 787,000, according to data released Thursday by the Department of Labor. Analysts had predicted claims for the week ending Jan. 2 would total 803,000.
President Donald Trump signed a $900 billion emergency relief package last month that included an extension of unemployment insurance benefits. The additional $300 in weekly benefits will continue until March 14, along with two other pandemic programs.
That boost is likely to juice consumer spending and lift business sentiment moving forward, increasing the demand for labor. However, there are still 10 million jobs yet to be recovered, the bulk of which may not return until 2023, economists predict.
“The four-week moving average of continued jobless claims has been moving lower since before Thanksgiving, but more from people exhausting benefits and rolling off than from getting back to work,” said Greg McBride, chief financial analyst for Bankrate.
“The recently signed stimulus bill that extends unemployment benefits to 50 weeks is likely to reverse this trend — not heralding bad news as much as providing a more accurate reflection of extended unemployment,” McBride said.
Thursday’s numbers come one day after a report from payroll processing company ADP, which showed the total number of people employed fell in December for the first time since April. Payrolls fell by 123,000 last month, compared to forecasts of an increase of 60,000.
The winter season is expected to bring a sharp increase in the already record totals for coronavirus infection rates and hospitalizations, after many Americans chose to travel and attend family gatherings over the holidays.
Topping a grueling year of job losses, total new claims for the week ended Dec. 26 came in at 787,000, the lowest total since November.
Focus now turns to Friday’s closely watched jobs report, the last employment snapshot under Trump, which is expected to show the lowest monthly total since April. Economists forecast that just 50,000 jobs were added for the month of December.
“While the job market prospects for 2021 are brighter, it will take the first half of the year for that momentum to build. Elevated unemployment will be with us long after the virus is vanquished,” McBride said.
