Initial jobless claims rose to 778,000 last week. This is the latest worrying sign of weakening momentum in the U.S. labor market as it grapples with a new wave of coronavirus cases and waning fiscal support.
The 30,000 increase in weekly unemployment claims was accompanied by a slight decrease in unemployment benefit claims from the federal pandemic, a separate program for workers who are not eligible for regular state benefits, the Labor Department said on Wednesday.
In total, nearly 1.1 million Americans filed unemployment claims for the first time last week, and about 20.5 million are receiving unemployment benefits, more than eight months since the coronavirus crisis began in the US.
“Promoting vaccine news bodes well for economic activity by mid-2021, but the phasing out of political safety nets in late 2020 means the near-term outlook will be bleak for many heading into the holiday season,” said economist Nancy Vanden Houten at Oxford Economics, wrote on a note.
The discouraging data on unemployment claims comes from the fact that negotiations on possible fresh impetus for the US economy stall with no evidence of serious negotiations between the outgoing Trump administration, Republicans who hold a majority in the US Senate, and Democrats, who control the house of representatives.
Joe Biden, the US president-elect, called for swift action to reach an agreement before he took office in January. So far, however, his vocations have brought little movement.
The labor market report came amid a spate of economic data released Wednesday morning, showing a mixed picture of how the US economy has fared since the first pandemic shock earlier this year.
The US Census Bureau confirmed that the economy recovered at an annualized rate of 33.1 percent – 7.4 percent from the previous quarter – in the third quarter as it recovered from a massive slump at the start of the pandemic.
However, economists are concerned that the pace of growth in the US slowed dramatically in the fourth quarter and production will struggle to return to pre-pandemic levels.
The US trade deficit, which US President Donald Trump cut during his four-year tenure, rose from $ 79.4 billion in September to $ 80.3 billion in October, roughly in line with expectations.
Durable goods orders rose 1.3 percent in October – 0.9 percent more than expected. Orders have risen for six months in a row and manufacturing continues to recover from the coronavirus lockdowns, albeit at a slower pace.
Meanwhile, orders for non-defense-related capital goods, excluding aircraft, which are seen as proxy for corporate investment, rose 0.7 percent above expectations, after rising 1.9 percent the previous month. Despite vaccine breakthroughs, the resurgence of coronavirus cases has clouded the outlook for manufacturing and business investment.