New US jobless claims up slightly last week to 870,000

25 Sep 2020 / 00:53 H.

WASHINGTON: Benefit claims filed by newly unemployed people in the United States rose slightly last week to 870,000, defying hopes that the wave of layoffs cause by the coronavirus pandemic would continue to ebb.

Claims filed in the week ended Sept 19 were 4,000 above the previous week's revised level, indicating that the world's largest economy is still struggling to recover from business shutdowns beginning in March to stop the spread of Covid-19.

Another 630,080 people filed new claims under a special programme for those not normally eligible, only about 45,000 less than the previous week.

The business shutdowns caused a surge in weekly claim filings to more than 6.8 million in late March.

Though they have decreased dramatically since then as states have started to reopen, they remain well above the worst single week seen during the 2008-2010 global financial crisis.

The data "provide further evidence of the slowing pace of economic recovery", Mohamed A. El-Erian of Allianz said on Twitter, noting the latest data went against analysts' expectation of a continued week-on-week fall.

The insured unemployment rate indicating people actually receiving benefits fell only 0.1 percentage points in the week ended Sept 12, to 8.6%, the most recent week data was available, with nearly 12.6 million people receiving regular benefits.

All told, slightly more than 26 million people were receiving benefits under all programmes in the week ended Sept 5.

The data are "disappointing and ominous," said Ian Shepherdson of Pantheon Macroeconomics, noting a worrying increase in national coronavirus cases and the continued impasse in Congress on passing more economic stimulus after a programme of expanded unemployment payments ended in July.

"Consumers' spending – nearly 70% of the economy – can't continue to increase at its recent pace in the aftermath of the ending of enhanced unemployment benefits, and the latest upturn in Covid cases and hospitalisations... threatens to trigger renewed restrictions on economic activity," he wrote in an analysis.

Separately, the Commerce Department said sales of new US single-family homes increased to their highest level in nearly 14 years in August, suggesting the housing market continued to gain momentum even as the economy's recovery from the Covid-19 recession appears to be slowing.

The department said on Thursday new home sales rose 4.8% to a seasonally adjusted annual rate of 1.011 million units last month, the highest level since September 2006. New home sales are counted at the signing of a contract, making them a leading housing market indicator.

July's sales pace was revised upward to 965,000 units from the previously reported 901,000 units.

Economists polled by Reuters had forecast new home sales, which account for about 14% of housing market sales, slipping 1% to a rate of 895,000-units.

The report followed on the heels of data this week showing sales of previously owned homes near a 14-year high in August.

The housing market is being powered by record-low mortgage rates and a pandemic-fuelled migration to suburbs and low-density areas in search of more spacious accommodation as many people work from home. Unemployment has disproportionately affected low-wage workers in the services sector, who are typically young and renters.

In August, new home sales rose 5.0% in the Northeast. They jumped 13.4% in the South, which accounts for the bulk of transactions. But sales fell 1.7% in the West and decreased 21.4% in the Midwest. The median new house price fell 4.3% to US$312,800 in August from a year ago. New home sales last month were concentrated in the US$200,000 to US$499,000 price range.

There were 282,000 new homes on the market last month, down from 291,000 in July. At August's sales pace it would take 3.3 months to clear the supply of houses on the market, down from 3.6 months in July. About 71% of the homes sold last month were either under construction or yet to be built. – AFP, Reuters

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