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US jobless claims drop more than expected even as calls for stimulus get louder

The unemployment report that came out on Thursday, termed as the best data since the virus outbreak, reveals the mixed trend in the US job market. Though jobless claims dropped in the week ended August 1, after rising for two consecutive weeks, the share of those availing Pandemic Unemployment Assistance remained high.

These numbers assume importance considering the deadlock over passing the second stimulus bill. Also, there has been widespread demand to renew the government scheme granting additional aid of $600 to households affected by the shutdown. The program expired last month, putting the claimants in dire straits.

Also Read:  US jobless claims hit record high of 3.28 mln as covid-19 crisis deepens

The Trump administration and the Congress have been drawing flak for not reaching a consensus on the new stimulus, which experts believe is crucial as far as economic recovery is concerned.

According to data published by the Bureau of Labor Statistics, a total of 1.2 million initial unemployment claims were filed during the week ended August 1. Economists were expecting a higher number. The four-week moving average of jobless claims eased to $1.4 million. A total of 655,707 persons availed pandemic assistance, which is relatively high despite a sequential decline.

The labor market has been going through one of the worst downturns since the onset of the coronavirus pandemic a few months ago, raising concerns that the economy is headed for a recession.

The improvement in claims shows that market conditions have improved since the number of applications surged to a record high of more than 6 million in April. Nevertheless, the deepening uncertainty over the pandemic calls for caution.

In the week ended July 25, the seasonally adjusted insured unemployment rate in the US economy dropped to 11%, or 16.1 million. .

Meanwhile, Wall Street’s reaction to the positive jobs data was not very encouraging. On Thursday, the market opened on a low note, after a short period of recovery when major indexes made steady gains.

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