The number of Americans filing new claims for unemployment benefits fell more than expected last week, new US government figures show.
But they remain extraordinarily high amid signs that the labour market recovery was losing steam as the Covid-19 pandemic continues and government support lapses.
Initial claims for state unemployment benefits totalled a seasonally adjusted 881,000 for the week ended August 29, compared to 1.011 million in the prior week, the Labor Department said today.
Economists polled by Reuters had forecast 950,000 applications in the latest week.
With last week's claims report, the Labor Department changed the methodology it used to address seasonal fluctuations in the data, which economists complained had become less reliable because of the economic shock caused by the coronavirus crisis.
The department said last Thursday it was switching to using additive factors to more accurately track seasonal fluctuations in the series.
It said in the presence of a large shift in the claims series, the multiplicative seasonal adjustment factors, which it had been using, could result in systematic over or under-adjustment of the data.
The labour market recovery from the depths of the pandemic in mid-March and during April appears to be faltering.
Though new Covid-19 infections have subsided after a broad resurgence through the summer, many hot spots remain, especially at college campuses that have reopened for in-person learning.
Businesses have exhausted government loans to help with wages, while a weekly unemployment supplement expired in July.
A report this week from the Federal Reserve based on information collected from the bank's contacts on or before August 24 showed an increase in employment.
The Fed, however, noted that "some districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft."
Other labour market indicators are also flagging a cooling in job growth. Private employers hired fewer workers than expected in August.
In addition, data from Kronos, a workforce management software company, and Homebase, a payroll scheduling and tracking company, showed employment growth stagnated last month.
The US government is scheduled to publish August's employment report on Friday.
According to a Reuters survey of economists non-farm payrolls likely rose by 1.4 million jobs last month after increasing 1.763 million in July. That would leave non-farm payrolls about 11.5 million below their pre-pandemic level.
Meanwhile, separate figures show that US employers announced another 115,762 job cuts in August, led by struggling airlines as the Covid-19 pandemic weighs on travel and financial assistance from the government lapses.
Though the layoffs reported by global outplacement firm Challenger, Gray & Christmas yesterday were 56% down from July, they lifted total job cuts so far this year to a record 1.963 million.
The previous all-time annual high was 1.957 million in 2001. Companies announced 160,411 hiring intentions in August.
"The leading sector for job cuts last month was transportation, as airlines begin to make staffing decisions in the wake of decreased travel and uncertain federal intervention," said Andrew Challenger, senior vice president at Challenger, Gray.
"An increasing number of companies that initially had temporary job cuts or furloughs are now making them permanent," he added.
The report followed news yesterday that private employers hired fewer workers than expected in August. The weak data raises the risk of a sharper slowdown in job growth in August.
Government assistance to workers and employers led to a sharp rebound in economic activity, but its expiration in recent weeks has left the recovery from the depths of the coronavirus crisis floundering.
United Airlines said it was preparing to furlough 16,370 workers on October 1. Airlines received $25 billion in government stimulus funds in March meant to cover payrolls and protect jobs up to and during September.
According to Challenger, Gray & Christmas, transportation companies announced 26,545 job cuts in August, bringing the tally this year to 131,571 jobs, a 482% increase compared to the January-August period in 2019.
Another 17,271 layoffs were announced at bars, restaurants, hotels and amusement parks in August. Entertainment and leisure companies have announced 799,051 job cuts this year.
