Jobless claims unexpectedly fell last week but still held at a historically elevated level, as impacts from the coronavirus pandemic still reverberated across the labor market.
The Department of Labor released its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Dec. 26: 787,000 vs. 835,000 expected and a revised 806,000 during the prior week
Continuing claims, week ended Dec. 19: 5.219 million vs. 5.370 million expected and a revised 5.322 million during the prior week
New jobless claims broke below the 800,000 level for the first time this month, after holding above that level for the past three consecutive weeks. Still, at 787,000, weekly initial jobless claims remain high compared to the about 200,000 new claims filed on average each week before the pandemic. Continuing claims, which measure the total number of individuals still receiving unemployment benefits, also unexpectedly fell.
By state, Illinois saw a significant drop in new claims for the week ended Dec. 26, with these falling by more than 28,000 on an unadjusted basis. Pennsylvania, Georgia and Texas each also saw notable decreases in unadjusted new claims. On the other hand, New York posted the largest increase in initial claims with a rise of more than 9,000, and California’s increase in new claims rose by nearly that amount as well.
This week’s jobless claims report did not yet include any impact from the newly authorized provisions included in Congress’s $900 billion stimulus package. But going forward, the labor market will likely see some benefits from the package’s hundreds of billions of dollars in small business aid and replenishment of the Paycheck Protection Program (PPP), which will offer loans to companies to help keep their workforces employed amid the pandemic.
“A relief bill is coming, but it arrives as some of the damage it aims to prevent has already occurred: confidence is waning, personal spending fell in November for the first time since April and more than 800K people filed first-time jobless claims each week so far in December,” Wells Fargo economists led by Jay Bryson said in a note on Friday. “The labor market is still seriously disrupted which is why the relief bill passed in Congress [last week] in the first place.”
The legislative package also includes an additional $300 in weekly augmented federal unemployment benefits, along with an extension through March of the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs. The PUA program offers benefits to gig and self-employed workers ineligible for regular state benefits, while PEUC gives the unemployed an additional 13 weeks of benefits to those who have exhausted regular state jobless benefits. As of this week’s data, more than 13 million Americans were claiming benefits between these two programs, comprising the majority of the more than 19 million people claiming benefits across all programs.
However, both the PUA and PEUC technically lapsed on Dec. 26 since President Donald Trump had not yet signed the coronavirus relief package into law before the programs’ expiration date. Still, the Labor Department does not anticipate the bill-signing delay will force a temporary pause in claimants receiving their benefits, a Labor Department spokesperson said in an email to Yahoo Finance.
Given the resurgence in unemployment claims throughout December, some economists are now bracing for the Labor Department’s monthly jobs report — due out Jan. 8 — to show the first net decline in non-farm payrolls since April. During the survey week for the non-farm payrolls report mid-month, jobless claims spiked to a three-month high of nearly 900,000.
“Incoming jobless claims data continue to show weak labor market conditions with increases in initial and continuing claims (after accounting for extended benefit programs) consistent with a decline in non-farm payroll employment during December,” Nomura economist Lewis Alexander wrote in a note.
—
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily:
Some wellness products growing ‘over 1,000%’ during pandemic: Ro CEO
What we can learn from the 17 stock market crashes since 1870
Find live stock market quotes and the latest business and finance news
For tutorials and information on investing and trading stocks, check out Cashay
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.