An additional 885,000 people filed for first-time unemployment benefits in the US last week, 800,000 claims higher than economists predicted.
The latest numbers from the Labor Department indicated that 885,000 more people filed for first-time unemployment benefits, compared to 862,000 from the previous week, setting the highest number since mid-September.
The additional claims this week is the fourth consecutive increase in first-time claims in relation to the previous weeks.
Latest unemployment numbers
On a more positive note, continuing claims, which refer to the total number of Americans seeking jobless benefits, has declined to 5.5 million.
However, over 20.6 million people have now filed for some form of government unemployment benefits in the past four weeks as of November 28, which represent an over 1.6 million increase from the week prior.
Additionally, more than 14 million people had filed for benefit claims under two of the US government's pandemic-related unemployment programs, which are scheduled to end at the end of the year unless the government extends them.
These numbers are in contrast of last month's Bureau of Labor Statistics’ monthly jobs report for October, which recorded US job recovery for the sixth consecutive month.
According to this report, 638,000 jobs were added in October but the US is still down approximately 10 million jobs since the onset of the coronavirus pandemic in February.
Aside from the additional jobs last month, the labor statistics bureau’s report also indicated that the unemployment rate went down from 7.9% in September to 6.9% in October. The rate drop beat economists’ consensus estimate of 7.7% for the month.
The decline was a result of numerous workers returning to their jobs, as demonstrated by a decrease in the number of people on temporary layoff, and slight change in the number of permanently unemployed workers.
Andrew Hunter, senior US economist at Capital Economics, argued that this was a sign that the longer-term impact of the pandemic may not be as severe as expected.
Outlook for the US job market
Economists and investors express excitement over a possible economic rebound in 2021 following the approval of the Pfizer coronavirus vaccine by the US Food and Drug Administration (FDA).
However, Federal Reserve chair Jerome Powell recognizes that many Americans still need help now.
In a press conference on Wednesday following the decision of the Fed to leave interest rates near zero, Powell said: "Although there has been much progress in the labor market since the spring, we will not lose sight of the millions of Americans who remain out of work."
AnnElizabeth Konkel, an economist with Indeed Hiring Lab, pointed out in a report: "It's apparent that Covid-19 is still wreaking economic havoc in real time. At nearly 1.4 million, total initial claims are over 6 times higher than during the pre-Covid era."
Meanwhile, Jefferies economists added that "the surging number of Covid cases and the reimposition of social distancing policies are making life difficult for service-providing businesses."
They said that "until Covid is more under control, claims are going to continue to be elevated," mentioning that additional layoffs in the food industry and other leisure sectors are expected if the government decides not to give further support.
