US jobless claims rise back above one million

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The number of Americans seeking unemployment benefits unexpectedly climbed back above one million last week, official figures show.

The Labor Department said claims rose to 1.1 million, ahead of economists’ forecasts of 925,000.

The rise came as US President Donald Trump faces increased pressure over his handling of the health crisis.

Coronavirus infections continue to spread across the US, prompting local authorities to restrict businesses.

Economists have warned that the recent jobs improvement is at risk of stalling, as health concerns drive many people to limit their activity and spending even as reopening continues.

The number of new claims for jobless benefits had dipped below one million to 971,000 for the first time in March in the week ended 8 August, fuelling hope that those concerns were overblown.

“Today’s rise in initial jobless will disappoint the market, especially following last week’s promising data,” said Richard Flynn, UK managing director at stock broker Charles Schwab.

“While hard-hit industries brought workers back in July, the level of weakness remains unprecedented, and the impact of virus-related rolling shutdowns could continue to reverse some of that improvement.”

‘Not healthy’

The US economy suffered its sharpest economic contraction in more than 70 years of record keeping in the April-June period, shrinking at an annual rate of 33%.

Although the unemployment rate has fallen from the 14.7% high in April as business open and activity resumes, the 10.2% rate recorded in July remains higher than any month during the 2007-2009 financial crisis.

More than 28 million people – nearly one fifth of the American workforce – were collecting some form of unemployment payment in the week ended 1 August.

“The number of individuals claiming benefits remains extraordinarily high – more than twice the peak of the Great Recession – underscoring that the labour market is a long way from being healthy,” said Nancy Vanden Houten, lead US economist at Oxford Economics.

Talks in Washington about further economic aid collapsed this month without a deal. The lack of agreement meant that an extra $600 weekly top up that Congress approved for unemployment benefits during the pandemic expired at the end of July.

Analysts have warned that the removal of that aid is likely to further hurt the recovery of the US economy, which relies on consumer spending.

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