Jobless claims jumped last week, reversing the previous week's declines and hitting their highest level since mid-September, as companies scaled back hiring amid record numbers of Covid-19 cases, hospitalizations and deaths.
The Labor Department reported Thursday that 853,000 Americans filed for first-time jobless benefits in the week ended Dec. 5, up from a revised 716,000 claims the week earlier. Economists polled by FactSet had been expecting claims of 712,000.
Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 5.757 million for the week ended Nov. 28, down from an upwardly revised 5.527 million the previous week, the Labor Department said.
Initial jobless claims, a proxy for layoffs, have slowly declined since dropping below 1 million a week at the end of August, but in recent weeks have floated around the 700,000 mark, the record high weekly figure before the pandemic.
Economists also noted that the weekly numbers were higher in part due to the Thanksgiving holiday, which only recorded a partial week of claims across states.
Some 20 million workers were receiving unemployment benefits in mid-November, according to the Labor Department, though much of that aid continues to come in the form of pandemic-specific assistance.
Those programs - one for gig workers and others not typically eligible for jobless benefits, and another for those who have exhausted eligibility for other programs - will expire at the end of the year.
Some 8.56 million Americans were claiming Pandemic Unemployment Assistance benefits through Nov. 21, while 4.533 million individuals were claiming Pandemic Emergency Unemployment Compensation benefits, the Labor Department said.
Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi remain divided over competing stimulus packages. McConnell backs a $916 billion proposal floated by the White House, while Pelosi prefers a $908 billion plan being worked on by a bipartisan group of lawmakers.
"With stimulus talks faltering, this jump in jobless claims may reignite negotiations," said Chris Larkin, Managing Director, Trading and Investing Product with E*TRADE Financial.
Congress faces a deadline of Dec. 18 to get a deal done as that is the date a year-end spending must be completed that would contain any relief aid.
Even so, "...the numbers provide a stark reality of shutdowns across the country which could fuel volatility in the weeks ahead," Larkin said.