New applications for unemployment almost held steady the week of New Years.
The initial weekly claims for jobless benefits fell by 3,000 to 787,000 after the prior week’s figure was adjusted up by 3,000 to 790,000. The decrease in jobless claims was smaller than the Dow Jones estimate of 815,000.
A report by the Labor Department also showed that continuing claims had dropped. The department showed a drop of 126,000 in continuing claims, taking the total down to 5.07 million claims. The unemployment rate is currently edging towards 6.8%, according to Dow Jones estimates.
The weekly jobless claims figures can be volatile during holiday periods because of challenges with seasonal adjustment for the statistics.
It is reported that most layoffs came from big businesses and the hospitality industry. Businesses, including hotels, restaurants, and bars, were particularly hard hit this winter as coronavirus cases have surged.
“A combination of Covid fear and state-mandated restrictions on activity in the services sector is squeezing businesses, and no real relief is likely until a sustained decline in pressure on hospitals emerges; that’s probably a story for late February at the earliest,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The four-week moving average for claims has also continued to decrease. Last week the numbers fell to 818,750. Despite the drop, the labor market is still profoundly impacted by the pandemic as the four-week average a year ago was 219,750.
The changing numbers come as new federal aid for unemployment starts up. The new benefit gives unemployed individuals an additional $300 supplemental benefit per week. The number is less than the $600 for unemployed people that was approved in April of 2020 and ended over the summer.
The increased payment is added on top of the unemployment benefits offered by the states. This addition may bring in additional applicants as the extra payments are distributed. Workers are not required to apply for jobless benefits the week that they are laid off.
Despite the slight dip in unemployment numbers, claims have remained high throughout the pandemic. Unemployment claims remained around four times their pre-pandemic average through the fall and winter. The pre-pandemic peak for unemployment claims was 695,000 claims.
It is expected that the Labor Department will report that the U.S. economy added just 50,000 jobs in December as 2020 comes to a close. This would be the smallest job gain since April when the economy lost 20 million jobs.
Other signs of a slowing economy have shown themselves in the last few months. One notable indicator is the decline in household spending and a fall in household income in November.
At the state level, Illinois is fairing the best, with the most significant drop in claims at 62,765, according to unadjusted data from the Labor Department. On the opposite side, multiple states showed gains of more than 10,000 claims, including Colorado, Georgia, Kansas, Virginia, and Texas.