New US jobless claims fell to the lowest level since early March last week but remained elevated above 700,000, as the Trump administration and Democrats remained at odds over a broad package of economic aid under two weeks before the presidential election.

Initial applications for unemployment benefits dropped to a seasonally adjusted 787,000, compared with 842,000 in the prior week, the US labour department said on Thursday. The figure was lower than economists’ forecast of 860,000 claims.

The federal Pandemic Unemployment Assistance programme, which offers benefits to the self-employed and others who would not qualify for regular benefits, registered 345,440 new claims on an unadjusted basis, up from 337,228.

The number of Americans actively collecting state jobless aid totalled 8.4m in the week that ended on October 10. That continued a positive trend in continuing claims, having dropped from 9.4m in one week and from 12.7m in the span of one month. However, economists have partly attributed the fall to unemployed workers exhausting regular benefits.

The insured unemployment rate, considered an alternative measure of joblessness, dropped to 5.7 per cent from 6.4 per cent.

Treasury secretary Steven Mnuchin and Nancy Pelosi, the Democratic House speaker, have continued stimulus negotiations into this week in a last-ditch attempt to hammer out an agreement before the poll.

Mark Meadows, White House chief of staff, said on Wednesday he was “optimistic” about the talks. “We do share one goal, and that is hopefully to get some kind of deal in the next 48 hours or so,” he told Fox Business. He added that funding for state and local governments was the biggest sticking point.

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As coronavirus outbreaks in America’s south and west this summer faded, hopes for a steadier recovery in the labour market rose after big states including Florida and Texas loosened curbs on businesses.

But health officials have warned that other regions, particularly the Midwest, could be at risk of outbreaks. Wisconsin, where the rate of positive tests has hit highs this month, has emerged as a new virus hotspot. The north-east states of New Jersey and Connecticut have also reported a rise in infections after quelling earlier outbreaks.

Federal Reserve officials have warned that the economy’s rebound could sputter without further stimulus from Washington. Republicans in the Senate put forward another $500bn bill this week that would increase unemployment aid, among other measures, but it was blocked by Democrats before reaching a vote. Donald Trump has said he would support a bigger spending plan, while House Democrats have backed a $2.2tn proposal.

The jobless claims report showed that 23.2m people were claiming benefits in all state and federal programmes as of October 3, down from 24.2m, according to unadjusted figures that are reported on a two-week delay.

The US has recovered half of the 22m jobs lost in March and April, bringing the unemployment rate down to 7.9 per cent in September — below its pandemic-era peak of 14.7 per cent. 

Via Financial Times