US initial jobless claims fall, easing worry of worsening market

People queueing outside a Kentucky Career Center in Frankfort on June 18, 2020. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - Applications for unemployment benefits in the US declined last week by more than projected, easing concerns of a renewed downturn in the labour market after several large states reported a pickup in coronavirus cases.

Initial jobless claims in regular state programs fell by 99,000 - the most in a month - to 1.31 million in the week ended July 4, Labor Department data showed Thursday (July 9).

The median forecast in a Bloomberg survey of economists called for 1.375 million. Continuing claims - the total number of Americans claiming ongoing unemployment benefits in state programs - declined to 18.1 million in the week ended June 27, compared with a median projection of 18.8 million.

US stocks were mixed at the open, while 10-year Treasury yields fell slightly. The latest numbers indicate that firings have continued to ebb, though job losses remain stubbornly high and labour-market gains may still be at risk of stalling in coming weeks. Prior to a surge in new virus cases that prompted several states - including Texas and Florida - to delay or walk back reopening plans, employers were adding millions of Americans back to payrolls.

The reversal in policy has led a cohort of rehired workers to find themselves out of work once again. Initial claims for regular state programs remain about double the worst week in the 2007-2009 recession, indicating a distressing number of workers continue to get caught up in the economic fallout of the pandemic.

The high level of initial and continuing claims "provides a cautionary message about the difficulties involved and the time it will take to heal a labour market thrown into turmoil by unprecedented circumstances," Joshua Shapiro, chief US economist at Maria Fiorini Ramirez, said in a note.

"The road back to February's peak employment levels will be a long and bumpy one." A separate report Thursday showed consumer confidence cooled for the first time in seven weeks amid the renewed outbreaks, raising the prospects of a tempering in the economic recovery.

Without seasonal adjustments, state initial claims fell by a more-moderate 32,000 from the prior week. Of states that have seen a recent surge in outbreaks, California and Florida saw decreases in unadjusted initial claims from the prior week. Arizona was little changed, while Texas initial claims rose by about 21,000.

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