Jobless fall fuels hope for US economy

The number of initial jobless claims in the United States for the last week of August fell to 881,000, after staying above the 1 million mark for two consecutive weeks, indicating improvement in a labor market ravaged by the COVID-19 crisis.

In the week ending on Aug 29, the number of US citizens filing for unemployment benefits decreased by 130,000 from a revised level of 1 million, the US Labor Department said in a report released on Thursday, making it the second time in the past 24 weeks that the figure has come in below 1 million.

"The modest downward trend in claims the past few weeks is one sign that the labor market's recovery has at least not gone into reverse and that employers continued to add jobs in August," Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis.

As COVID-19 shutdowns rippled through the workforce, initial jobless claims spiked by 3 million to reach a record 3.3 million in the week ending March 21, and then doubled to reach a record 6.87 million in the week ending March 28.

After that, the number had been declining for 15 weeks consecutively－though it was still at historically high levels－before the trend was reversed in the week ending July 18 amid a resurgence in COVID-19 cases.

The number then fell to 963,000 in the week ending on Aug 8, the first time it dipped below 1 million since mid-March, but the trend was reversed again in the week ending on Aug 15, when the number rose back above the 1 million mark.

House, however, noted that the drop in jobless claims for the last week of August was "overstated" by a change in methodology, and "is not a sign the labor market's recovery is kicking into higher gear."

She also pointed out: "The level of new and continuing claims remains elevated, signaling the labor market continues to experience a significant degree of disruption."

The Labor Department's jobless claims report showed the number of people continuing to collect state unemployment benefits declined by 1.24 million to 13.25 million in the week ending Aug. 22.

The total number of people claiming benefits in all programs for the week ending on Aug 15, however, increased 2.2 million to 29.2 million.

There has been an alarming increase of claims for the Pandemic Unemployment Assistance program, a federal program that covers independent contractors and the self-employed who are not eligible for regular state programs. The Labor Department's report showed that the number of people claiming benefits under the PUA program totaled 13.6 million in the week ending on Aug 15, an increase of 2.6 million from the previous week.

The report also showed that the four-week moving average, a method to iron out data volatility, decreased by 77,500 to 991,750.

The US unemployment rate previously soared to a record 14.7 percent in April, as COVID-19 ravaged the economy. It declined slightly to 13.3 percent in May and continued to fall to 11.1 percent in June, as businesses gradually reopened across the country.

Resurgence in cases

Amid a resurgence in COVID-19 cases, US employers only added 1.76 million jobs in July, and the unemployment rate dropped to 10.2 percent. Despite the improvement, payrolls have yet to recover even half of the jobs lost since February, remaining 12.9 million below pre-pandemic levels.

The momentum of the labor market's recovery "seems to be fading", which points to a smaller gain in payrolls ahead, House said.

According to a report released on Wednesday by payroll data company Automatic Data Processing, private companies added a fewer-than-expected 428,000 jobs in August. The monthly employment report by the US Department of Labor's Bureau of Labor Statistics, which will include employment data from both the private sector and the government, was scheduled to be released on Friday.

Xinhua, Scott Reeves in New York and agencies contributed to this story.