Thursday 6 August 2020 1:53 pm

Weekly US jobless claims beat expectations and drop to 1.2m

Slightly under 1.2m Americans made new jobless claims last week, a better-than-expected figure that will fuel hopes that the US economy’s recovery will not be derailed by coronavirus cases.

Initial jobless claims came in at 1.19m last week, down from 1.44m a year earlier, the Labor Department said. The weekly total was much better than the 1.42m figures economists were expecting.

Read more: US economy shrinks by record 33 per cent amid coronavirus pandemic

Claims peaked at a record 6.87m in late March, shocking economists with a figure far higher than anything seen before.

They dropped off in May as the US jobs market made a surprising recovery. The unemployment rate dropped to 13.3 per cent – still extremely high by historical standards – in May from 14.7 per cent in April. This confounded analysts who had predicted it would surge to 19.8 per cent.

But coronavirus cases began rising rapidly again in July. This caused some states to pull handbrake turns on their plans to reopen their economies, worrying policymakers and businesses.

US lawmakers have been locked in tough negotiations over the next fiscal stimulus package. Many Republicans have fought to reduce or scrap the weekly $600 (£456) unemployment benefits supplement, arguing that it was keeping people from going back to work.

However, the scheme stopped last Friday when Republicans and Democrats could not come to an agreement. Some expect this to boost employment in the coming weeks. 

But others argue that the expiration of sweeteners that encouraged businesses to bring back workers will hurt the labour market.

Read more: US economy: Demand hit by new coronavirus lockdowns

Today’s figures came ahead of the official “nonfarm payrolls” data for July. It will give the latest unemployment rate.

The figures also also showed the number of people continuing to receive jobless aid beat expectations. It totaled 16.11m in the week ending July 25 from 16.95m in the prior week, beating predictions of 16.3m continuing claims.