U.S. Jobless Claims Drop While Remaining Above Pre-Virus Level

(Bloomberg) -- Fewer Americans than expected sought unemployment benefits last week, as the slow labor-market recovery grinds on while businesses contend with a pickup in coronavirus cases.

Initial jobless claims in regular state programs decreased by 36,000 to 837,000 in the week ended Sept. 26, Labor Department figures showed Thursday. Continuing claims, the total pool of Americans on state benefit rolls, fell to 11.8 million in the week ended Sept. 19.

Read more: Bloomberg's TOPLive blog on jobless claims

Economists expected initial claims to fall to 850,000 and for continuing claims of 12.2 million, according to median estimates in a Bloomberg survey.

The report came with a key caveat: the figures from California, the most populous state, used the prior week's numbers because the state suspended acceptance of new applications for two weeks to improve its systems and cope with a backlog of filings.

U.S. stocks rose at the open Thursday and Treasury yields were higher amid signs of progress in Washington toward a fresh fiscal-stimulus package.

While the latest claims numbers reflected gradual labor-market improvement, the figures remain well above pre-virus levels. Other reports suggest risks are mounting for the economy and, despite the latest progress, lawmakers have failed for months to reach a deal on renewing fiscal stimulus.

A separate report Thursday showed Americans' incomes fell in August by the most in three months after the government's supplemental unemployment benefits expired, threatening to temper consumer spending.

What Bloomberg's Economists Say

“Jobless claims declined slightly more than expected, but remained stubbornly high amid mounting layoffannouncements. Claims have been artificially skewed lower in this week's data as a result of California putting applications on hold to revamp its system.”

-- Eliza Winger

Read more for the full reaction note.

U.S. airlines are starting to lay off more than 30,000 workers unless they get additional federal aid. In addition, several major companies announced tens of thousands in job cuts this week, including Walt Disney Co., Allstate Corp. and Royal Dutch Shell Plc. Meanwhile, Bloomberg reported Goldman Sachs Group Inc. is embarking on a plan to eliminate roughly 400 positions as the coronavirus pandemic outlasts the financial industry's resolve to offer jittery employees stability.

The flood of news also suggests that management-level and salaried employees are increasingly at risk, after initial rounds of losses across industries that hit lower-level and hourly workers harder. Outside of big companies, Yelp Inc. data show over 97,000 small businesses across the U.S. have shut for good since March 1.

“Even as jobs are being recovered job losses are mounting, indicative of continuing strains in the labor market,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note Thursday.

The government's monthly jobs report on Friday -- the last before November's presidential election -- is set to show job gains moderated further in September, with forecasts for payrolls to rise by about 872,000 and unemployment dropping slightly to 8.2%. That report reflects the period covering the second half of August and first half of September.

Florida, Texas and Georgia led the drop in initial state claims on an unadjusted basis. States with a rise in filings included Maryland, New Jersey and Illinois.

The report also showed more Americans tapping a federal program for people whose regular state benefits expired, indicating that unemployment is persisting for many people.

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