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Jobless Claims Hold Above 1 Million as Employers Stay Cautious

The number of Americans applying for jobless benefits remains above 1 million as companies continue to lay off workers amid caution over the economic recovery.

The number of Americans applying for first-time jobless benefits remained above 1 million again last week as companies continued to take a cautious stance on hiring, even as the broader economy shows signs of recovering from the economic downturn.

The Labor Department reported Thursday that 1.006 million Americans filed for first-time jobless benefits for the week ended Aug. 15, up from a revised 1.106 million claims the week earlier. Economists polled by FactSet had been expecting claims of roughly 1 million.

Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 14.535 million for the week ended Aug. 8, revised downward from 14.578 the previous week. 

The continuing claims numbers are reported with a one-week lag, but are considered a better gauge of the labor market as they reflect employers actions to bring workers back on the payroll.

New applications for unemployment benefits have stagnated around 1 million a week recently, significantly lower than the near 7 million peak reached in March at the height of the pandemic and shutdowns, though still well above pre-pandemic levels of about 200,000 claims a week.

With the virus still impacting numerous areas of the country and with concerns among businesses of all stripes on how much demand there will be for goods and services through the remainder of the year – and in turn need for workers to fulfill that demand – job re-creation has stalled.

While the U.S. economy added a better-than-expected 1.8 million jobs in July and the headline unemployment rate dipped to 10.2%, the pace of hiring slowed, mainly from a surge in coronavirus infections and new business closures.

That has prompted economists and more recently Federal Reserve officials to take a more cautious stance - particularly as additional flare-ups of Covid-19 potentially exacerbated by back-to-school and other plans next month could mean a second dip in economic activity, and in turn an increase in joblessness.

Fed Chairman Jerome Powell is expected to address those concerns and how the central bank is considering approaching policy at the central bank’s annual Jackson Hole symposium, virtually this year, at 9:10 a.m. ET, where it will reveal and discuss its long-awaited monetary policy framework review.

Fed-watchers anticipate the central to adopt a more flexible policy that would allow inflation to rise above its 2% annual target even while it keeps interest rates near zero.

Specific to pandemic-related jobless claims, the Labor Deparment said Thursday that 49 states reported 10,972,770 individuals claiming Pandemic Unemployment Assistance benefits, and 49 states reported 1,407,802 individuals claiming Pandemic Emergency Unemployment Compensation benefits.

The largest increases in initial claims for the week ending August 15 were in New Jersey (+11,580), Florida (+11,190), New York (+9,879), Texas (+9,096), and Tennessee (+3,793), while the largest decreases were in California (-12,155), Nevada (-6,817), Georgia (-4,236), Puerto Rico (-2,864), and Pennsylvania (-1,510).