US weekly jobless claims drop more than expected

Initial claims for state unemployment benefits totaled a seasonally adjusted 881 000 for the week ended August 29, compared to 1.011 million in the prior week, the Labour Department said on Thursday. Economists polled by Reuters had forecast 950 000 applications in the latest week.

The department said last Thursday it was switching to using additive factors to more accurately track seasonal fluctuations in the series. It said in the presence of a large shift in the claims series, the multiplicative seasonal adjustment factors, which it had been using, could result in systematic over- or under-adjustment of the data.

The labour market recovery from the depths of the pandemic in mid-March through April appears to be faltering. 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.

Businesses have exhausted government loans to help with wages, while a weekly unemployment supplement expired in July.

A report on Wednesday from the Federal Reserve based on information collected from the US central bank’s contacts on or before August 24 showed an increase in employment. The Fed, however, noted that “some districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft.”

The government is scheduled to publish August’s employment report on Friday. According to a Reuters survey of economists nonfarm payrolls likely rose by 1.4 million jobs last month after increasing 1.763 million in July. That would leave nonfarm payrolls about 11.5 million below their pre-pandemic level.