Initial US jobless claims fall below 1m

First-time claims for US unemployment benefits dipped below 1 million for the first time since March 21, the Labor Department reported Thursday, suggesting layoffs are moderating and hiring is picking up.

A total of 963,000 workers filed initial jobless claims for the week ended Aug 8, a decline of 228,000 from the previous week.

Economists surveyed by Dow Jones estimated 1.1 million new claims would be filed. The number of initial jobless claims peaked at nearly 7 million in March.

"The labor market continues to improve, but unemployment remains a huge problem for the US economy," said Gus Faucher, chief economist at PNC Financial Services, in a research report.

"The number of people filing for unemployment insurance, both regular and (Pandemic Unemployment Assistance), continues to steadily decline as layoffs abate. But job losses remain extremely elevated, far above their pre-pandemic level."

PNC expects a "choppy recovery" dependent on the course of the novel coronavirus pandemic and additional federal stimulus.

Employers hired 1.8 million workers in July, the third month in a row of hiring gains. The unemployment rate fell to 10.2 percent last month after peaking at 14.7 percent in April.

Initial jobless claims had remained above 1 million for 20 consecutive weeks as the US economy was locked down as part of the effort to contain COVID-19.

The number of new claims hasn't been below 1 million since March 14, when 282,000 workers sought benefits before the pandemic hit.

The biggest drops in initial jobless claims at the state level last week came in Florida (down 23,180), New York (down 21,905) and Texas (down 11,233) from the previous week, the Labor Department said.

Continuing claims, or workers collecting benefits for at least two weeks, totaled 15.5 million, a decrease of 604,000 from a week ago.

The four-week moving average, intended to smooth out spikes or dips in the number of new filings, was 15,169,500, a decrease of 454,500 from the previous week's revised average, the Labor Department said.

A strong economy is key to US President Donald Trump's reelection prospects in November.

A rebounding labor market would appear to boost Trump's chances despite him trailing Joe Biden, the Democratic challenger, in several national polls and in some key states.

Last spring, Congress sent $1,200 checks to eligible citizens as part of the effort to prevent the economy from crashing.

US Treasury Secretary Steven Mnuchin has said he wants the government to start issuing checks this month, but members of Congress have yet to reach a deal.

Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law last March authorizing the payments. The parties disagree on the extension of higher unemployment benefits, delaying action.

Democrats want to continue the extra $600 a week for the unemployed, but Republicans believe the added benefit is a disincentive for lower-paid employees to return to work because some receive more in unemployment benefits than they earn in sales or service jobs.

Democrats argue that the increased unemployment benefit is needed to help the unemployed pay their bills.

House Speaker Nancy Pelosi, a California Democrat, said on Wednesday that she and the White House are "miles apart" in negotiations.