Jobless Claims Jump Again as Businesses Continue to Scale Back

Jobless claims unexpectedly jump again, rising to 885,000, as businesses continue to scale back their ranks amid the worst surge in the pandemic to date.
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Jobless claims unexpectedly jumped again last week as businesses continued to scale back their ranks amid the worst surge in the pandemic to date.

The Labor Department reported Thursday that 885,000 Americans filed for first-time jobless benefits in the week ended Dec. 12, up from a revised 862,000 claims the week earlier and the highest since early September. Economists polled by FactSet had been expecting claims of 800,000.

Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 5.508 million for the week ended Dec. 5, down from an upwardly revised 5.781 million the previous week, the Labor Department said.

The numbers reflect ongoing troubles in the all-important labor market, where the pandemic has continued to impact employers' decisions on keeping staff on the payroll, even during the critical holiday shopping season.

The broader economic numbers point to a slowdown, particularly in the labor market. Retail sales dropped 1.1% in November from a month earlier, according to a Commerce Department report Wednesday, reinforcing that consumer spending continues to slow from the summer rebound.

Overall job growth cooled in November as many Americans gave up looking for work. At the same time, many Americans have stopped collecting regular jobless benefits and have switched to collecting pandemic-related assistance, run by state agencies.

On that front, some 9.24 million Americans claimed Pandemic Unemployment Assistance benefits through Nov. 28, while 4.81 million individuals claimed Pandemic Emergency Unemployment Compensation benefits - a sign that more people are seeking assistance due to being out of work than even the headline numbers suggest.

At the same time, Congress reportedly is near to signing off on a $900 billion aid package that could see checks of between $600 to $700 sent out before the end of the year, helping offset lost income for workers out of a job.

The Federal Reserve is also doing what it can do ensure borrowing costs remain low for consumers and businesses alike into the foreseeable future. The Fed on Wednesday pledged to keep rates near record lows for at least three years, while continuing to buy $120 billion of bonds a month until 'substantial' progress is made on jobs and inflation.