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Unemployment claims in the US climb to 861,000 as layoffs remain high

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The number of Americans asking for unemployment help rose to 861,000 last week, proof that layoffs remain painfully high despite a steady decline in the number of confirmed viral infections.

Claims from laid-off workers rose 13,000 from the previous week, which was revised sharply upward, the labor ministry said on Thursday. Before the virus broke out in the United States last March, weekly claims for unemployment benefits had never exceeded 700,000, even during the great recession of 2008-2009.

The figures show that the labor market has stalled, with employers adding just 49,000 jobs in January after downsizing in December. Almost 10 million jobs remain lost due to the pandemic. Although the unemployment rate fell from 6.7% to 6.3% last month, it did so in part because some people stopped looking for jobs. People who are not actively looking for a job are not considered unemployed.

Yet fraudulent claims for unemployment aid in some states and other issues, including potential backlogs, can drive the totals up. Last week, for example, Ohio reported a huge increase in claims and said it had set aside about half of that increase for further review for the sake of fraud. And this week, Ohio reported that claims under a federal program that covers self-employed workers and construction workers have grown from around 10,000 to over 230,000. That could reflect a backlog of claims. , because Ohio had not reported data under this program two weeks ago.

Likewise, Illinois reported this week that jobless claims under its state regular program had doubled from 34,000 to nearly 68,000.

Data on jobless claims remains messy, said Stephen Stanley, chief economist at Amherst Pierpont.

Demand could increase in the coming weeks, economists say, due to ice storms that have caused business closures across the country. Still, economists are generally optimistic that as the weather improves, COVID vaccines are more widely administered and more federal aid is distributed, the economy will pick up in the spring and summer.

The surge in claims may also reflect, in part, the extension of two federal unemployment benefit programs as part of an aid package that Congress passed late last year. The expansion of these programs meant that some people who had exhausted all their unemployment assistance could reapply. The federal assistance program also provided an unemployment benefit of $ 300 per week in addition to regular state benefits.

Thursday’s report showed that a total of 18.3 million people were receiving unemployment assistance as of January 30, up from 19.7 million the week before. About three-quarters of these recipients receive checks from federal benefit programs, including programs that provide unemployment assistance beyond the 26 weeks granted by most states. This trend suggests that a significant proportion of the unemployed have been out of work for more than six months, reflecting a sluggish labor market for many.

Still, the two federal unemployment assistance programs, one that provides up to 24 additional weeks of support and the other that covers self-employed and construction workers, will expire in about a month.

President Joe Biden is proposing to extend both programs through August as part of his $ 1.9 trillion package now before Congress. The legislation would also provide an additional $ 400 per week in federal unemployment assistance, in addition to state benefits. This money would replace a $ 300 per week benefit included in the relief program approved last year.

Some industry data suggests hiring remains low. UKG, a company that provides time management software, estimates that among its customers, mostly small businesses, the number of shifts performed nationwide only increased by 0.2% in the month latest. This lukewarm increase indicates that hiring has been slow so far this month.

Still, the economy has shown signs of recovery as states and cities relaxed some trade restrictions and the latest round of $ 600 stimulus checks made its way into the economy. Sales in retail stores and restaurants soared in January, jumping 5.3% from December, the government said on Wednesday.

Furniture, electronics and appliance stores posted some of the biggest gains, likely due to strong growth in home sales last year.

Factory output also rose last month, the Federal Reserve said on Wednesday, its fourth consecutive increase, led by increased production of steel and other metals.

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