Jobless Claims Surge Back to Near 1 Million as Virus Spurs Cuts

Jobless claims rise to 965,000, well above economists' forecasts, as the pandemic continues to spur companies to close their doors and shed workers.
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Jobless claims rose to near 1 million last week, backing up their highest level since last August, as the coronavirus pandemic continued to spur companies to shed workers.

The Labor Department reported Thursday that 965,000 Americans filled for first-time jobless benefits in the week ended Jan. 9, up from a revised 787,000 claims the week earlier. Economists polled by FactSet had expected claims of 811,500. The total was the highest since the week of Aug. 22, when just over 1 million claims were filed.

Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 5.215 million for the week ended Jan. 2, down from the previous week's unrevised 5.274 million, the Labor Department said.

The report, the last weekly tally of jobless claims under the Trump administration's watch, reinforces what December's nonfarm payrolls report has already confirmed: Tightened restrictions and stay-at-home orders in various parts of the country have been weighing on the labor market.

Employers cut 140,000 jobs in December, marking the first decline since the pandemic hit the country last spring. Leisure and hospitality workers bore the brunt of the decline as a nationwide surge in coronavirus cases forced restaurants and bars to close.

Another factor: workers giving up searching for a job. 

On that front, some 7.442 million Americans claimed Pandemic Unemployment Assistance benefits through Dec. 26, while 4.116 million individuals claimed Pandemic Emergency Unemployment Compensation benefits, a sign that people continue to seek assistance due to being out of work.

Markets had a limited reaction to the number, as investors wait to see the offsetting impact of Washington's recently approved stimulus package, which is hoped to spark another round of hirings. President-elect Joe Biden later Thursday is announcing his hopes for another package likely in excess of $1 trillion.

"At a certain point tough jobs numbers like we saw this morning can serve as the tinder for those calling for a correction, but the market’s view seems to be that the light at the end of the tunnel remains in sight, despite a plodding vaccination rollout," said Mike Loewengart, Managing Director, Investment Strategy with E*TRADE Financial 

"Further, a bleaker-than-excepted jobs report translates into a greater likelihood for a full-throated stimulus package, which perversely acts as a tailwind for the market."