WASHINGTON: The number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months, suggesting the labor market was stalling amid a resurgence in new COVID-19 cases and depressed demand.
Initial claims for state unemployment benefits increased 109,000 to a seasonally adjusted 1.416 million for the week ended July 18. That was the first rise in applications since the week ending March 28, when claims raced to a record 6.867 million as nonessential businesses like restaurants and gyms were shuttered to slow the spread of the coronavirus.
Stocks on Wall Street fell. The dollar slipped against a basket of currencies. U.S. Treasury prices rose.Cases of the respiratory illness have exploded across the country, prompting some authorities in the hard hit South and West regions to either shut down businesses again or pause reopenings. Workers being sent back home again are joining a second wave of layoffs, triggered by lack of demand as the economy battles a recession, which started in February.
The Federal Reserve's Beige Book report of anecdotal information on business activity collected from contacts across the nation, published last week noted"new layoffs" across districts. The U.S. central bank added"many contacts who have been retaining workers with help from the PPP said that going forward, the strength of demand would determine whether they can avoid layoffs.
"It is hard to understate the significance of those payments to household income," said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina."Income from unemployment benefits has more than offset the drop in employee compensation since the pandemic struck."
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