Alarm As US Unemployment Claims Hit 1mn Again

The number of Americans filing new claims for unemployment benefits hovered around 1 million last week, suggesting the labor market recovery was stalling as the Covid-19 pandemic drags on and financial aid from the government dries up.

Other data on Thursday confirmed the economy suffered its deepest contraction in at least 73 years in the second quarter because of the disruptions from the coronavirus, with corporate profits declining further.

Though new Covid-19 infections have subsided after a broad resurgence through the summer, many hot spots remain, especially at college campuses that have reopened for in-person learning.

With the fiscal stimulus ebbing, signs are growing that the economy's recovery from the pandemic is slowing. Some economists are dialing back lofty growth estimates for the third quarter.

Initial claims for state unemployment benefits fell 98,000 to a seasonally adjusted 1.006 million for the week ended August 22, the Labour Department said. Economists had forecast 1 million applications in the latest week.

The reopening of businesses in May helped to pull down claims from a record 6.867 million in March, when establishments were shuttered in an effort to slow the spread of the coronavirus. Claims fell below 1 million early this month for the first time since the pandemic started in the United States.

With a government-funded programme offering businesses loans to help with wages lapsing and a weekly unemployment supplement expiring in July, the labour market momentum has slowed.

In a separate report on Thursday, the Commerce Department said gross domestic product plunged at a 31.7 percent annualised rate last quarter, the deepest decline in output since the government started keeping records in 1947. That was revised from the 32.9 percent pace reported last month. (Reuters)