"Given that coronavirus caseloads remain extremely high and are set to increase in the near term due to holiday travel and parties, the labor market will remain soft over the next few months," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
Elevated claims are in line with other data that have suggested the economy was taking a beating from business restrictions and retrenchment in consumer spending because of the pandemic. Minutes of the Federal Reserve's December 15-16 meeting published on Wednesday showed policymakers expected soaring coronavirus cases"would be particularly challenging for the labor market in coming months.
US stocks opened higher as investors bet on more pandemic aid under a Democrat-controlled Congress. The dollar rose against a basket of currencies. US Treasury prices were lower.The government is scheduled to publish its closely followed employment report for December on Friday, January 8. According to a Reuters survey of economists, nonfarm payrolls likely increased by 71,000 jobs after rising by 245,000 in November.
Economists expect the unemployment subsidy will push up first-time jobless claims after uncertainty whether it would be renewed contributed to a drop in applications in recent weeks.