The number of Americans filing new claims for unemployment benefits fell previous week, but remained perched at extremely high levels as the labor market recovery shifts into low gear and consumer spending cools amid fading fiscal stimulus.
Initial claims for state unemployment benefits totaled a seasonally adjusted 860,000 for the week ended Sept. 12, compared to 893,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 850,000 applications in the latest week. Claims are more than four times their level at the beginning of the year.
The Federal Reserve on Wednesday kept interest rates near zero, noting that the pandemic “will continue to weigh on economic activity, employment, and inflation in the near term and poses considerable risks to the economic outlook over the medium term.”
Fed Chair Jerome Powell said more fiscal support was likely to be needed, adding that though the labor market has improved “substantially” it was “a long way from maximum employment.”
Reports this week showed a slowdown in retail sales in August, which economists blamed on the reduction in extended unemployment benefits for millions of Americans. Production at factories also cooled last month.
After declining from a record 6.867 million at the end of March as businesses reopened after being shuttered to stem the spread of the coronavirus, claims have flattened, with layoffs spilling over to industries that were not initially impacted by the mandated closures.
A program to help businesses with wages expired in August, while $25 billion in government assistance for airlines’ payroll expires this month. Last week’s claims covered the period during which the government surveyed businesses for the nonfarm payrolls component of September’s employment report.