A sign advertising job openings at a fabric and craft store on January 12
Joe Biden’s administration is seeking $1.9tn in new coronavirus stimulus to help the US economy weather the pandemic © AP

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New claims for US unemployment benefits pulled back from a four-month high last week, as the labour market continued to feel the effects of the pandemic and coronavirus shutdowns.

States reported 900,000 requests for jobless aid during the week that ended on January 16, the Department of Labor said on Thursday, compared with economists’ forecast for 910,000 claims. There were 926,000 initial claims in the previous week, which marked the highest weekly level since August but probably included a boost from applications delayed by the holiday season. The previous week’s figure was also revised lower from 965,000.

The number of Americans actively collecting state jobless benefits unexpectedly fell to 5.1m as of January 9, compared with 5.2m one week earlier.

The insured unemployment rate, considered an alternative measure of joblessness, remained flat at 3.6 per cent.

The federal Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits, took in 423,734 claims on an unadjusted basis, from 284,886 a week earlier.

The US labour market has stumbled following a resurgence of coronavirus that began in the autumn and has affected nearly every state in the country, prompting renewed restrictions on business and social activity.

“Fiscal stimulus prospects, along with broader vaccine diffusion, are pointing to a brightening labour market outlook, but with the pandemic still raging, claims are poised to remain elevated in the near-term,” analysts at Oxford Economics said.

Officials at the Federal Reserve warned late last year that fresh stimulus would be needed to support jobs growth while the rollout of coronavirus vaccines expands. Donald Trump signed a $900bn package in December after it was approved by Congress.

Joe Biden, who entered the White House on Wednesday, has proposed $1.9tn in stimulus and other measures related to fighting Covid-19, but the plan will probably face resistance from lawmakers wary of passing another massive bill.

Janet Yellen, the former Fed chair and Mr Biden’s nominee for Treasury secretary, argued that “the smartest thing we can do is act big”.

The pledges for further stimulus come amid a relentless climb in the US death toll from the pandemic. More than 4,400 fatalities, a record, were reported on Wednesday. Since the pandemic began, Covid-19 has claimed about 400,000 lives in the US alone, by far the highest in the world.

“It is clear that the resurgent pandemic is having a big impact on economic activity and hence on jobless claims in certain regions, and that is likely the main factor behind higher readings,” said Joshua Shapiro, chief US economist at MFR.

Economists have partly attributed the recent acceleration in jobless claims to the implementation of the December stimulus bill, which provided an extra $300 in weekly unemployment aid.

The pace of claims last week slowed in Texas, Pennsylvania and New York but accelerated in Arizona, Illinois and Maryland, according to advance figures that are not seasonally adjusted. The report included an estimate for weekly claims in California that was about one-third lower than the week before.

All state and federal programmes had a combined 16m people claiming benefits as of January 2, down from 18.4m, according to unadjusted figures that are reported on a two-week delay. That reflected a sharp decline in PUA claimants around the holidays.

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