US labour market recovery fading

24 January, 2021 12:00 AM printer

NEW YORK: The number of Americans filing new applications for unemployment benefits decreased modestly last week as the Covid-19 pandemic tears through the nation, raising the risk that the economy shed jobs for a second straight month in January.

Despite the labor market woes, the economy remains anchored by strong manufacturing and housing sectors. Other data on Thursday showed homebuilding and permits for future residential construction surged in December to levels last seen in 2006. Factory activity in the mid-Atlantic region accelerated this month, with manufacturers reporting a boom in new orders, report agencies.

The services sector has borne the brunt of the coronavirus crisis, disproportionately impacting lower-wage earners, who tend to be women and minorities. Addressing the so-called K-shaped recovery, where better-paid workers are doing well while lower-paid workers are losing out, is one of the key challenges confronting President Joe Biden and his new administration.

White House economic advisor Brian Deese said the fragile labor market underscored the urgency for US Congress to act quickly on Biden’s $1.9 trillion relief plan to “get this virus under control, stabilize the economy, and reduce the long-term scarring that will only worsen if bold action isn’t taken.”Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 900,000 for the week ended Jan. 16, the Labor Department said. Economists polled by Reuters had forecast 910,000 applications in the latest week.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs 1.4 million people filed claims last week.

Out-of-control coronavirus infections are disrupting operations at businesses like restaurants, gyms and other establishments where crowds tend to gather, reducing hours for many workers and pushing others out of employment.


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