New jobless claims likely broke back above 800,000 at the turn of the new year as the labor market struggled to regain traction amid the ongoing pandemic.
The U.S. Department of Labor is set to release its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results expected in the report, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Jan 2: 803,000 expected vs. 835,000 during the prior week
Continuing claims, week ended Dec. 26: 5.200 million expected vs. 5.219 million during the prior week
The labor market saw a small reprieve last week as jobless claims ticked below 800,000 level for the first time since November. However, some economists attributed the brief improvement to a quirk in adjusting for seasonality factors around the holidays rather than the start of a down-trend, given the weakness displayed throughout the month in the labor market. Even with last week’s dip, the four-week moving average for new claims actually rose by nearly 18,000 from the prior week’s average to 836,750.
Continuing claims, measuring the total number of Americans still receiving state unemployment benefits, likely improved only trivially to 5.2 million in the last full week of December, in another sign of weakening momentum in the labor market recovery.
And alongside those counted as continuing claimants, an additional nearly 5 million Americans were also claiming benefits on the Pandemic Emergency Unemployment Compensation program, which offers extended insurances for those who exhausted their six months of regular state benefits. The passage of Congress’s $900 billion virus-relief package extended both Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance — which had nearly 8.5 million claimants as of late December — until at least March.
The Labor Department’s latest jobless claims report comes a day before the agency’s monthly non-farm payrolls report. The most recent weekly unemployment claims reports will not be reflected in the monthly data, given that the survey week for the report takes place around the 12th of the month. Concerningly, however, new jobless claims during the survey week spiked to a three-month high of nearly 900,000.
ADP’s closely watched monthly release on private sector employment already disappointed for December. That report showed the first negative private payrolls print since April, as new lockdown measures weighed most heavily on leisure and hospitality employment. Though ADP’s results have been an imperfect indicator of employment changes reported in the Labor Department’s monthly non-farm payrolls print, it has typically aligned at least directionally with the government report.
Though consensus economists still expect to see the Labor Department’s official non-farm payrolls print reflect modest net payroll gains for December, some individual economists are forecasting declines.
“Momentum has weakened in recent months, a trend that will likely persist in the near term,” High Frequency Economists economist Rubeela Farooqi said in a note Wednesday. “Risks to the labor market are skewed to the downside from a deteriorating health backdrop that will impact business activity.”
This post will be updated with the results of the Labor Department’s weekly jobless claims report Thursday at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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