New weekly unemployment claims likely hovered near last week’s elevated levels as the coronavirus pandemic continued to grip the U.S. economy.
The Department of Labor is set to release its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here are the main results expected in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Jan. 16: 935,000 expected and 965,000 during the prior week
Continuing claims, week ended Jan. 9: 5.300 million expected and 5.271 million during prior week
Initial unemployment claims reached a five-month high of 965,000 during the week ended Jan. 9, as seasonality factors coincided with a post-holiday spike in coronavirus cases to weigh heavily on the labor market data.
“Seasonal adjustment problems are the key factor driving jobless claims right now,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Wednesday. He added that he expects jobless claims to come in well below consensus estimates at 850,000 last week.
“The trend in claims clearly rose late last year as the third COVID wave triggered restrictions in many states, but it probably is now about flat,” he said.
Still, both new and continuing claims rose last week, suggesting a “modest deterioration in labor market conditions,” Nomura Chief Economist Lewis Alexander said in a note Monday.
Continuing claims, a measure of the total number of individuals still receiving regular state unemployment benefits, increased for the first time since late November at the beginning of January, but have mostly remained on a steady downtrend since peaking at nearly 25 million in May. And based on last week’s report, 18.4 million Americans were still receiving unemployment benefits of some kind, including about 11.6 million claiming through the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs.
Prospects of additional fiscal stimulus on top of the $900 billion package Congress just passed last month could help cushion some of the fallout for these tens of millions of unemployed Americans. The Biden administration unveiled a $1.9 trillion stimulus proposal last week, which called for an extension of these federal unemployment programs beyond their current spring expiration date, an increase to weekly enhanced unemployment benefits and for additional aid to small businesses and state and local governments.
However, given the narrow Democratic majority in the Senate, passing all of these measures may face some hurdles in the near-term or be pared down prior to passage. In the meantime, incoming economic data will likely continue to reflect the latest surge of COVID-19 cases and business restrictions.
“While we expected initial claims to retrace some of last week’s unexpectedly large increase, job gains in January may be minimal given ongoing COVID disruptions,” Brett Ryan, senior U.S. economist for Deutsche Bank, wrote in a note.
This post will be updated with the results of the Labor Department’s weekly jobless claims report Thursday at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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