The numbers: New applications for U.S. unemployment benefits fell in late November for the first time in three weeks — probably due in part to the Thanksgiving holiday — but new jobless claims remain stubbornly high.
The latest decline, though welcome, is unlikely to dispel fresh worries about rising layoffs and a slowdown in hiring after a record wave of coronavirus cases. A variety of indicators point to a softening labor market.
Initial jobless claims dropped by a seasonally adjusted 75,000 to 712,000 in the seven days ended Nov. 28. Economists polled by MarketWatch had forecast initial jobless claims to total 780,000.
Another 288,701 people applied for benefits through a temporary federal-relief program that expires at the end of the year, the government said Thursday.
The combined number of new state and federal jobless claims still hasn’t dropped below 1 million a week since the start of the pandemic more than eight months ago.
What happened: The decline in jobless claims last week may have been exaggerated by Thanksgiving. Some people who lose their jobs put off filing their claims during holidays until the following week.
The weekly claims figures tend to prone to large swings from Thanksgiving through New Year’s Day, when many people are hired for temporary jobs that end after the holiday season.
New jobless claims had fallen steadily through the summer and dipped to a pandemic low of 711,00 early in November, but the decline came to a halt after the coronavirus exploded again.
The number of people receiving benefits through programs administered by the states, meanwhile, sank again. These so-called continuing jobless claims fell by 569,000 to a seasonally adjusted 5.52 million in the week ended Nov. 21 and touched a new pandemic low.
The decline is not as good as it looks, though.
Continuing claims funded by a temporary federal program rose by an unadjusted 59,732 to 4.57 million in the week ended Nov. 14, the latest data available. These claims have more than tripled since August as people who’ve exhausted state benefits shift to the federal program, pointing to a growing number of Americans threatened with long-term unemployment.
In normal times, continuing claims are closely aligned with the number of people who are actually receiving unemployment benefits, but the data has become less accurate during the pandemic.
A new study by a federal watchdog agency concluded that continuing claims have been inflated by fraud, double counting, inconsistent state reporting and other problems.
The total number of people receiving benefits from eight separate state and federal programs, for instance, was reported at an unadjusted 20.16 million as of Nov. 14.
Yet the government’s more comprehensive monthly jobs report indicated that a far smaller 11.1 million people were unemployed in October.
Some economists have long suspected the jobless-claims totals were inaccurate because of the large gap with monthly employment figures.
Big picture: The flood of new coronavirus cases has forced some businesses to lay off workers and put off hiring. In other cases workers fearful of catching the virus have been absent, making it harder for companies to operate at full tilt.
The damage to the labor market so far has been relatively small compared to the spring, but if the viral outbreak gets any worse it’s likely to stunt the economic recovery and cause more misery for the unemployed.
What they are saying? “Jobless claims came down more than expected, likely due to holiday hiring, so we shouldn’t read in a trend, especially given they were up significantly the previous two weeks,” said corporate economist Robert Frick of Navy Federal Credit Union.
“Virus transmission rates remain high and layoffs are likely to rise over coming weeks as curbs on business operations broaden,” said chief U.S. economist Rubeela Farooqi of High Frequency Economics.
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.83% and S&P 500 /zigman2/quotes/210599714/realtime SPX +1.39% /zigman2/quotes/210599714/realtime SPX +1.39% were set to open higher in Thursday trades.