The number of Americans filing for the first time for unemployment benefits recorded an unexpected figure when it increased last week, although there are other indications that the labor market is recovering lately. The market recovery was driven by additional fiscal stimulus and the declining Covid-19 cases and eventually allowed more service businesses to reopen.
A report released by the Department of Labor today showed that the total unemployment claims last week recorded a total reading of 861,000 claims. This reading has exceeded the expectations set by the analysts at 765,000 and jumped up from the previous week of 848,000.
Unemployment claims remain at the peak of 665,000 recorded during the 2007-2009 recession. However, the number of claims recorded is still below the reading recorded last March at 6.867 million.
Analysts argue that the increase in unemployment claims is due to the temporary closure of vehicle factories due to lack of semiconductor chips. General Motors announced it will lower production at the Fairfax plant in Kansas City in the week beginning February 8.
The Covid-19 epidemic has been declining since mid-January. Yesterday's data showed retail sales rose to a seven-month high.
At the same time the U.S. government approved a Covid-19 stimulus package worth nearly $ 900 billion at the end of December, which included a $ 600 check to most low-income Americans and some middle-income people.
The package also provides weekly government-funded unemployment subsidies as well as benefits for millions of people who do not meet the state unemployment program requirements.
