The pace of layoffs increased for the first time in five weeks, raising concerns about the economic damage being caused by the resurgent coronavirus.
About 742,000 people filed initial jobless claims last week, the Labor Department announced Thursday, an increase of more than 30,000 from the week before. Another 320,000 filed for benefits through the Pandemic Unemployment Assistance program, which aids self-employed and gig workers, bringing the total of new filings to more than 1 million.
The report did have some good news, however. All told, the number of people receiving any kind of unemployment aid fell significantly, dropping by 840,000 to 20.3 million.
At the same time, though, that level of participation in jobless assistance programs remains exceptionally high, and the number of people falling into long-term unemployment is growing, with nearly 4.4 million people receiving aid in the Pandemic Emergency Unemployment Compensation program for those who have exhausted their state-level benefits.
Bumpy path for the labor market: Economists worry that ramped up restrictions enacted to fight the virus surge could drive unemployment higher in coming months. “The road to recovery is likely to be quite rocky, unfortunately,” Nathan Sheets, PGIM Fixed Income’s chief economist, told Bloomberg News. “The virus and the restrictions being put in place to fight the virus are likely to take a bite out of economic activity over the next, say, three or four months.”
Warnings from analysts: The International Monetary Fund released a report Thursday that warns that the recovery is looking less robust. “While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars,” the report says. “Uncertainty and risks are exceptionally high.”
The G-20, a forum for central bankers from the leading industrialized nations, also expressed concerns. “The recovery is uneven, highly uncertain and subject to elevated downside risks, including those arising from renewed virus outbreaks in some economies,” the group said in a communique reported by Bloomberg.
IMF Managing Director Kristalina Georgieva told Bloomberg that the data underlines the need for more fiscal support. The recovery is “losing momentum, and in that context our first message to leaders is: do not withdraw support for the economy prematurely,” Georgieva said Thursday. “It’s so important that we don’t pull back until we see the health crisis in the rear-view mirror.”
