First time jobless claims for unemployment aid in the US hit their lowest point since coronavirus lockdowns began in mid-March, signalling an uneven recovery for the labour market nearly six months after the pandemic first hit the economy. 

There were 881,000 initial jobless claims on a seasonally adjusted basis for the week ending August 29, the US Department of Labor said on Thursday. That was lower than economists’ forecast for 950,000 claims, and reflected a change in methodology in the way government statisticians measure the gauge. 

Claims had hovered above 1m the previous two weeks, after briefly dipping below that level earlier in August for the first time since lockdowns began.

The labour department changed the methodology it uses to address seasonal fluctuations and reduce distortions in the weekly claims data, which partly explains the drop-off in claims.

The federal Pandemic Unemployment Assistance programme, which extends aid to the self-employed or those who would not qualify for regular unemployment compensation, had 759,482 new claims on an unadjusted basis. That was up from 607,808 the previous week.

Meanwhile, the number of unemployed people actively collecting jobless aid eased for a fifth consecutive week. Continuing claims dropped to 13.3m from 14.5m for the week that ended August 22, compared with economists’ forecast for 14m.

The so-called insured unemployment rate, considered an alternative measure of joblessness, slipped to 9.1 per cent of the workforce, down from 9.9 per cent.

Of the millions of American workers furloughed or laid off when coronavirus lockdowns began in the spring, only a fraction have recovered their jobs. Indeed, Friday’s non-farm payroll report is expected to show the US economy created just 1.4m jobs in August.

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The spread of coronavirus in the American south and west over summer hindered the economic rebound. US GDP contracted at an annualised rate of 31.7 per cent in the second quarter, the most in postwar history. 

More than a month after certain key benefits in the Cares Act expired, Congress has still not agreed on further stimulus for the economy. 

US President Donald Trump last month took executive action to divert $44bn in disaster relief money to help replace part of the $600 a week in federal unemployment benefits that expired in late July. Of that amount, only $2.6bn had been spent as of September 1. The White House has also authorised a payroll-tax deferral plan to aid American workers, but many employers have balked at the plan.

Via Financial Times