US unemployment claims fell last week

Initial claims for unemployment benefits in the US fell to 1.18 million last week — the lowest level since the novel coronavirus pandemic engulfed the economy in March — but still far above the prepandemic record of 695,000 during the 1982 recession, the Labor Department reported Thursday.

Economists surveyed by Dow Jones expected 1.42 million new claims to be filed.

New claims peaked at about 6.9 million in late March.

The number of first-time unemployment claims filed for the week ended Aug 1 dropped 249,000 from the previous week. That may suggest stabilization and perhaps a slight rebound after claims increased for two weeks in a row.

The four-week moving average, which flattens week-to-week volatility in the number of initial claims filed, declined by 413,250 to 16.6 million.

However, initial jobless claims have exceeded 1 million for 20 consecutive weeks, and the carnage from the nationwide economic shutdown intended to limit the spread of the coronavirus is profound.

Continuing claims, or those who have received benefits for at least two consecutive weeks, declined by 844,000 to 16.1 million, the Labor Department said.

"Both initial and continuing claims are at extremely high levels and indicate that many employers continued to lay off workers in July," said Bill Adams, a senior economist at PNC Financial Services Group, in a research note.

"Further complicating the picture, the expiration of extended unemployment insurance benefits on July 31 may be clouding the signal from the claims data."

Last week's decline came as an extra $600 a week in benefits ended. Congress is debating if the extra benefit should be extended at its current level or reduced.

Democrats say the extra money is needed to help the unemployed meet routine expenses, but Republicans say the additional benefit discourages people from returning to work and will slow the recovery.

President Donald Trump has said he will issue an executive order if there is no agreement, but didn't say how much he believed the extra benefit should be.

"The Democrats are primarily interested in a $1 trillion bailout of the poorly run states," Trump said Wednesday. "And we can't go along with the bailout money. We're not going to go along with it, especially since it's not COVID-related."

The Labor Department will release its July jobs report Friday, and the variation in the two reports is likely to continue.

ADP's National Employment Report released Wednesday showed private employers added 167,000 jobs in July.

However, ADP's survey tracks its clients' payroll data to calculate job gains while the Labor Department's total is compiled from a nationwide survey of private payrolls. The two surveys therefore often present widely divergent data, including in May and June.

Economists surveyed by Dow Jones estimate that 1.5 million jobs were added last month, and the unemployment rate fell to 10.6 percent from 11.1 percent in June.

Employers shed 21 million jobs earlier this year as the economy shut down. But hiring surged in May and June, adding a total of 7.5 million jobs as some sectors of the economy reopened, the Labor Department said.

"We believe this will be a sharper but shorter recession and recent upside surprises in growth data and police action have increased our confidence that this will be a deep V-shaped recovery," said Chetan Ahya, chief global economist at Morgan Stanley, in a research report.

Meanwhile, The Wall Street Journal reported that more American farmers are filing for bankruptcy this year as federal payments fall short of making up for a continued slump in agricultural prices.

About 850 farmers filed for Chapter 12 bankruptcy protection in the 12-month period ended June 30 — 8 percent more than a year earlier.

Chapter 12 allows "family farmers" and "family fishermen" to restructure their debts and avoid liquidation or foreclosure.