The number of Americans filing first-time applications for unemployment benefits surged last week, confirming a weakening in labor market conditions as a worsening COVID-19 pandemic disrupts operations at restaurants and other businesses.
Initial claims for state unemployment benefits totaled a seasonally adjusted 965,000 for the week ended Jan. 9, compared to 784,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 795,000 applications in the latest week.
Claims were also likely lifted by reapplications for benefits following the government’s renewal of a $300 unemployment supplement until March 14 as part of nearly $900 billion in additional relief approved at the end of December.
Government-funded programs for the self-employed, gig workers and others who do not qualify for the state unemployment programs as well as those who have exhausted their benefits were also extended.
Authorities in many states have banned indoor dining to slow the spread of the coronavirus. The economy shed jobs in December for the first time in eight months.
The Federal Reserve’s Beige Book report of anecdotal information on business activity collected from contacts nationwide in early January showed on Wednesday that “contacts in the leisure and hospitality sectors reported renewed employment cuts due to stricter containment measures.”
The central bank also noted that the resurgence in the coronavirus was causing staff shortages in the manufacturing, construction and transportations sectors. The virus has infected more than 22.5 million people in the United States and killed over 376,188, the most of any country.
Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession. Economists say it could take several years for the labor market to recover from the pandemic.