New US jobless claims hovered near 1m last week, although the overall number of Americans collecting unemployment benefits fell as more businesses rehire workers.

Initial applications for unemployment aid totalled a seasonally adjusted 1m for the week ending August 22, the US Department of Labor said on Thursday. Economists had anticipated that claims would hit 1m, one week after rising back above that mark to 1.1m.

The federal Pandemic Unemployment Assistance programme, which offers benefits to the self-employed or other individuals who would not qualify for regular unemployment compensation, had 607,806 new claims on an unadjusted basis. That was up from 524,986 during the week before.

The number of unemployed workers actively collecting state jobless aid eased for a fourth consecutive week. Continuing claims dropped to 14.5m from 14.8m for the week that ended August 15, compared with a peak of 24.9m in May and matching economists’ forecast.

However, unemployment remains historically high. During the 2008-09 financial crisis, continuing claims hit 6.6m.

The so-called insured unemployment rate, considered an alternative measure of joblessness, also fell to slip below 10 per cent for the first time since early April. Continuing claims equalled 9.9 per cent of the workforce, down from 10.1 per cent.

The decline in claims comes with negotiations between the White House and congressional Democrats over further economic stimulus at a standstill.

Donald Trump has signed executive orders seeking to extend supplemental jobless benefits and suspend the collection of payroll taxes. The emergency unemployment aid, which expired at the end of July, would restart at a lower level under Mr Trump’s order, but the timing remains uncertain. Economists have predicted that unemployed workers could begin receiving additional jobless aid around the end of August.

READ ALSO  US charges Russians over hackings including French ruling party

Economists believe the labour department’s monthly jobs report due next week will show an increase of 1.55m payrolls in August, which would reflect a slower pace of hiring for a second straight month. The US added nearly 9.3m jobs between May and July as businesses emerged from shutdowns. With those gains, the US has clawed back 42 per cent of the 22.2m jobs lost in March and April.

The US economy contracted by the most in postwar history in the second quarter of 2020 amid unprecedented shutdowns to combat the spread of coronavirus. Gross domestic product shrank at an annualised rate of 31.7 per cent, according to a second estimate from the Bureau of Economic Analysis on Thursday. A preliminary reading pegged the economy’s contraction at 32.9 per cent rate.

The jobless claims report showed there were 27m people claiming benefits in state and federal programmes as of August 8, down from 28.1m, according to unadjusted figures that are reported on a two-week delay. This tally includes PUA claims and another Cares Act measure that extended unemployment benefits for up to 13 weeks.

Via Financial Times