California Scrambles Weekly Unemployment Claims in US; the labor market is recovering

WASHINGTON, Sept.30 (Reuters) – The number of Americans filing new jobless claims rose further last week as California moved more people to another program after funded aid expired by the government earlier this month to maximize their access to aid.

The labor market recovery remains intact, with Thursday’s Labor Department report showing the number of unemployed falling steadily in mid-September. California announced on September 17 that approximately 340,000 people benefiting from the Emergency Pandemic Unemployment Compensation (PEUC) program, which expired on September 4, had been transferred to the extended-term program of the United States. Federal state that remained in effect until September 11.

The California Department of Employment Development said the transfer, which allowed PEUC claimants to receive an additional week of benefits, would show a sharp increase in claims filed, even though it reflected an existing claimant moving from a program to another. The PEUC was part of expanded federally funded unemployment programs to cushion the blow of the COVID-19 pandemic on unemployed Americans.

In addition to the California distortions, a resurgence of COVID-19 infections, driven by the Delta variant of the coronavirus, could have caused a modest increase in claims, as some companies in the high-contact service sectors laid off workers due to a demand. scaled down. Infections are decreasing, leading to a resumption of economic activity.

“The increase in initial claims is less of a concern than it looks,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The increase in the number of new deposits in California could lead to offloads.”

Initial claims for state unemployment benefits increased from 11,000 to 362,000 seasonally adjusted for the week ended September 25. This was the third consecutive weekly increase.

Economists polled by Reuters had forecast 335,000 candidates for last week. Unadjusted claims, which economists say provide a better reading of the labor market, fell from 8,326 to 298,255 last week.

Claims in California increased by 17,978 last week, adding to the 17,218 increase the week before. There was also a surge in demands in Michigan last week, likely linked to the idling of some automakers’ assembly plants as they try to manage their semiconductor supply amid shortages. global.

Claims in Texas have also increased significantly, likely linked to high cases of coronavirus in the state. But there have been sharp drops in deposits in Virginia, Maryland, Arizona, Ohio and Louisiana. Claims, which fell from a record 6.149 million in early April 2020, remain above their pre-pandemic levels.

Wall Street stocks were trading lower, leaving the benchmark S&P 500 (.SPX) on track to end its seven-month winning streak. The dollar slipped against a basket of currencies. US Treasury prices have fallen.

CHMAGE is shrinking

The claims report also showed that the number of people continuing to receive benefits after a first week of aid fell from 18,000 to 2.802 million during the week ended September 18, a sign that more people were finding employment. job.

The alleged continuing claims covered the week in which the government asked households about September’s unemployment rate. Continuing claims declined slightly between the August and September survey periods.

The unemployment rate was 5.2% in August. Claims data is monitored to determine when a labor shortage, which limits hiring, will begin to ease after the expiration of expanded benefits.

Businesses and Republicans have blamed these benefits for keeping the unemployed at home. There was a record 10.9 million jobs open at the end of July. It is estimated that more than 6 million people lost their pandemic benefits on September 6.

The total number of people receiving unemployment checks under all programs fell to 5.028 million in the week ended September 11, from 11.250 million the week before.

“So far, there has been little evidence that improved benefits significantly prevent workers from re-entering the workforce,” said Isfar Munir, economist at Citigroup in New York. “Employment increased similarly in states that ended benefits earlier and those that ended later.”

The economy created 235,000 jobs in August, the least in seven months. Lack of child care, fears of contracting the coronavirus and career changes linked to the pandemic have been blamed for the labor shortage.

Federal Reserve Chairman Jerome Powell told lawmakers on Thursday that guardians and retirees made up most of the labor market participation deficit. Powell said he was optimistic that a large chunk of retirees would return to the workforce.

A separate Commerce Department report released Thursday showed the economy grew at a slightly faster annualized rate of 6.7% in the second quarter, revised up from the 6.6% pace reported in August. Growth was driven by government pandemic relief money, which boosted consumer spending. The economy grew at a rate of 6.3% in the first quarter.

Growth appears to have slowed in the third quarter due to the Delta variant as well as shortages of raw materials, which hurt sales of motor vehicles and limited construction and home purchases. Estimates of gross domestic product for the third quarter are less than 5%.

“The economy is expected to pick up steam after a lull at the end of the summer,” said Lydia Boussour, chief US economist at Oxford Economics in New York.

“We expect a slow improvement in the health situation, strong household finances, restocking and additional fiscal stimulus will support growth momentum in 2022.”

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

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