The pace of new applications for US unemployment aid slowed last week but remained above 1m, as businesses continue to struggle with the impact of coronavirus outbreaks in some parts of the country.

There were 1.2m initial jobless claims, compared with 1.4m for the prior week, according to seasonally adjusted figures from the Department of Labor. That was lower than economists’ forecast of 1.42m.

Initial claims in the federal Pandemic Unemployment Assistance programme, which extended aid to the self-employed or other individuals who would not qualify for regular unemployment compensation, decreased last week to 655,707 from 908,800 on an unadjusted basis.

The number of Americans actively collecting state benefits fell to 16.1m for the week that ended July 25, coming off a sudden jump to nearly 17m the week before. Continuing claims, which peaked at 24.9m in May and are reported on a one-week delay, equalled 11 per cent of the workforce. The so-called insured unemployment rate was 11.6 per cent a week earlier.

California, Florida and Texas — the three most populous states — are among those to renew curbs on businesses this summer in an effort to reverse an increase in Covid-19 infections. New cases and current hospitalisations have been on the decline in several states across the south and west, raising hopes that the sunbelt has turned a corner in its fight against the virus.

However, health officials have warned that other states that had been spared early in the pandemic could face an accelerated rise in cases. Economists believe regional outbreaks may slow the US economic recovery from months of widespread shutdowns.

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It was the first time in three weeks that initial claims in state programmes eased, having climbed in late July after consistently falling from highs seen at the start of the pandemic. However, the rate of jobless claims remains historically high, having hit a peak of 669,000 during the 2008-09 financial crisis.

Lawmakers in Washington have been locked in negotiations over a fresh stimulus package, with a possible extension of supplemental unemployment aid among the issues under debate. The $600 per week in additional benefits expired at the end of July.

The latest figures on jobless claims arrived one day before the US government’s report on the labour market, which is expected to show that hiring in July slowed with employers adding an estimated 1.6m non-farm payrolls. Economists also anticipate that the unemployment rate fell to 10.5 per cent last month from 11.1 per cent.

Hiring picked up in May and June as businesses began to rehire workers, following a record loss of 20.5m jobs in April. The US recorded 2.5m new jobs in May and 4.8m in June.

Via Financial Times