First-time claims for U.S. unemployment benefits climbed by much more than expected in the week ended January 9th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims rose to 965,000, an increase of 181,000 from the previous week’s revised level of 784,000.
Economists had expected jobless claims to inch up to 795,000 from the 787,000 originally reported for the previous week.
With the bigger than expected increase, jobless claims reached their highest level since hitting 1.011 million in the week ended August 22nd.
“Some of the rise in claims was likely due to the addition of $300 in weekly top-off benefits,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “Not all individuals eligible for unemployment assistance actually claim benefits, and the supplementary payments add an incentive to file for benefits.”
She added, “While prospects for the economy later in 2021 are upbeat, the labor market recovery has taken a step backward and we expect claims to remain elevated with the risk that they rise from last week’s levels.”
The Labor Department said the less volatile four-week moving average edged up to 834,250, an increase of 18,250 from the previous week’s revised average of 816,000.
Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also rose by 199,000 to 5.271 million in the week ended January 2nd.
The four-week moving average of continuing claims still fell by 5,215,750, a decrease of 59,000 from the previous week’s unrevised average of 5,274,750.
Last Friday, the Labor Department released a separate report unexpectedly showing a decrease in U.S. employment in the month of December.
The Labor Department said non-farm payroll employment fell by 140,000 jobs in December after climbing by an upwardly revised 336,000 jobs in November.
The decline surprised economists, who had expected employment to increase by about 71,000 jobs compared to the addition of 245,000 jobs originally reported for the previous month.
Employment decreased for the first time since April as the recent surge in coronavirus cases led to a nosedive in employment in the leisure and hospitality sector, which lost 498,000 jobs.
Private education employment also declined, while the job losses were partially offset by gains in professional and business services, retail trade, and construction.
Meanwhile, the report said the unemployment rate came in at 6.7 percent in December, unchanged from November. Economists had expected the unemployment rate to inch up to 6.8 percent.
The material has been provided by InstaForex Company – www.instaforex.com