U.S. weekly jobless claims at 14-month low; inflation heating up

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits dropped to a 14-month low last week as companies held onto their workers amid a growing labor shortage that helped to curb employment growth in April.

The scramble for workers comes as the reopening economy is experiencing a boom in demand, resulting in widespread shortages of inputs at factories and fanning inflation. Producer prices increased more than expected in April, leading to the biggest annual gain since 2010, other data showed on Thursday.

The worker shortage is despite nearly 10 million Americans being officially unemployed, a disconnect that economists expect will resolve in the coming months as increased vaccinations ease COVID-19 stress and enhanced unemployment benefits expire, allowing some workers to return to the labor market.

“With demand for workers high and layoffs relatively low, we should see strong hiring in the months to come, as barriers to employment, such as lack of childcare, lessen,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “For many, especially low-wage workers, returning to a job is a puzzle in which several pieces, such as transportation, wage levels and benefits must fall into place.”

Initial claims for state unemployment benefits dropped 34,000 to a seasonally adjusted 473,000 for the week ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.

Claims have dropped from a record 6.149 million in early April 2020, but remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.

Some economists believe the enhanced unemployment benefits programs, including a weekly $300 government subsidy, could be encouraging some people to attempt to file a claim for assistance, though not every application is approved.

The economy created 266,000 jobs in April after adding 770,000 in March, which was partly blamed on the generous unemployment benefits. There are a record 8.1 million open jobs.

Several states in the South and Midwest, such as Tennessee and Missouri, that have unemployment rates below the national average of 6.1% have recently announced they will end federally funded pandemic unemployment benefits next month.

Economists cite the still-bloated jobless rolls as supporting the thesis that unemployment checks were keeping some workers home. There were 3.655 million people receiving benefits after an initial week in the week ended May 1, down 45,000 from the prior week. A total 16.9 million people were collecting unemployment checks under all programs at the end of April.

The government-funded benefits end in early September.

Richmond Federal Reserve president Thomas Barkin said on Thursday, “the question of how to unclog the labor market is going to be a critical one,” in keeping the recovery on track.

Stocks on Wall Street rebounded on the claims data after declining for three straight sessions. The dollar was steady against a basket of currencies. U.S. Treasury prices rose.

DEMAND BOOM

The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions on businesses.

The resulting pent-up demand is pushing against supply constraints. In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March.

A 0.6% increase in the cost of services accounted for about two-thirds of the rise in the PPI. Services, which increased 0.7% in March, were last month driven by higher prices for portfolio management, airline tickets and food retailing as well as physician care.

Goods prices gained 0.6%, lifted by an 18.4% jump in steel mill products. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in November 2010 and followed a 4.2% jump in March.

Part of acceleration in the PPI was due to last spring’s weak readings dropping out of the calculation. The report followed on the heels of news on Wednesday that consumer prices increased by the most in nearly 12 years in April.

Though rising prices have spooked investors, the Federal Reserve has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average.

Fed Vice Chair Richard Clarida said on Wednesday it would be “some time” before the economy is healed enough for the U.S. central bank to consider scaling back its support. The Fed slashed its benchmark overnight interest rate to near zero last year and is pumping money into the economy through monthly bond purchases. Its preferred inflation measure, the core personal consumption expenditures (PCE) price index is at 1.8%.

“Each big inflation report for the next several months will test the Fed’s approach to seeing through these issues it promises to be transitory,” said Will Compernolle, a senior economist at FHN Financial in New York.

Based on the CPI and PPI data, Goldman Sachs is forecasting that core PCE increased 0.49% in April and 3.38% year-on-year.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. consumer confidence hits one-year high; house prices soar

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. consumer confidence raced in March to its highest level since the start of the COVID-19 pandemic, supporting views that economic growth will accelerate in the coming months, driven by more fiscal stimulus and an improving public health situation.

The survey from the Conference Board on Tuesday also showed consumers were fairly upbeat about the labor market, with a measure of household employment rebounding after declining in February. Restrictions on non-essential businesses are being rolled back as more Americans get vaccinated against COVID-19.

That, along with the White House’s massive $1.9 trillion pandemic relief package, has led economists to predict the economy will this year experience it best performance in nearly four decades. The survey showed more consumers intended to buy homes, cars and household appliances over the next six months.

“Consumers finally are fully on board with the pending expansion,” said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia. “What remains to be seen is how quickly services industries such as travel and leisure will open up, allowing venues for consumers to release their pent-up demand.”

The Conference Board’s consumer confidence index jumped 19.3 points to a reading of 109.7 this month, the highest level since the onset of the pandemic in March 2020. The increase was the largest since April 2003. Confidence remains well below its lofty reading of 132.6 in February 2020. Economists polled by Reuters had forecast the index would rise to 96.9.

The survey’s present situation measure, based on consumers’ assessment of current business and labor market conditions, soared to a reading of 110.0 from 89.6 last month. The expectations index, based on consumers’ short-term outlook for income, business and labor market conditions increased to 109.6 from a reading of 90.9 in February.

Stocks on Wall Street were trading lower. The dollar rose against a basket of currencies. U.S. Treasury prices were largely lower.

INFLATION WORRIES

The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, rebounded to a reading of 7.8 this month from -0.8 in February. That measure closely correlates to the unemployment rate in the Labor Department’s employment report.

That fits in with expectations for a sharp acceleration in job growth this month. According to a Reuters survey of economists, nonfarm payrolls likely increased by 639,000 jobs in March after rising by 379,000 in February. The government is due to publish its closely-watched employment report for March on Friday.

The share of consumers expecting an increase in income over the next six months rose to 15.5% from 14.8% last month. The proportion anticipating a drop increased to 13.3% from 12.9% in February. More consumers expected to purchase homes, motor vehicles and major household appliances compared to February.

Consumers’ inflation expectations over the next 12 months increased to 6.7% from 6.5% in February.

“Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items,” said Lynn Franco, senior director of economic indicators at the Conference Board. “However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”

The rise in house-buying intentions suggests demand for homes could remain strong and continue to drive up prices as supply remains tight. The housing market is being powered by demand for more spacious accommodations for home offices and schooling. It remains strong despite a rise in mortgage rates this year.

A separate report on Tuesday showed the S&P CoreLogic Case-Shiller 20-metro-area house price index soared 11.1% in January from a year ago, the fastest in 15 years, after increasing 10.2% in December.

“A wave of eager buyers is being forced to act swiftly and face heightened competition for the few homes available,” said Matthew Speakman, an economist at Zillow. “The combined dynamic is pushing prices upward at their strongest pace in years, and it doesn’t appear that there is an end in sight.”

(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Paul Simao)

U.S. weekly jobless claims hit one-year low; fourth-quarter GDP revised up

By Lucia Mutikani

WASHINGTON (Reuters) -The number of Americans filing new claims for unemployment benefits dropped to a one-year low last week as economic activity rebounds after weather-related disruptions in February.

But the labor market is not out of the woods yet, with the weekly jobless claims report from the Labor Department on Thursday showing a staggering 18.953 million people were still receiving unemployment checks in early March. It will likely take years for a full recovery from the pandemic’s scarring.

“Things have improved over the last year, but there are still millions of people dealing with real economic pain,” said AnnElizabeth Konkel, economist at Indeed Hiring Lab. “Increased vaccinations are hopefully the beginning of the end.”

Initial claims for state unemployment benefits tumbled 97,000 to a seasonally adjusted 684,000 for the week ended March 20, the lowest level since mid-March. Data for the prior week was revised to show 11,000 more applications received than previously reported.

Economists polled by Reuters had forecast 730,000 applications in the latest week. The decline in claims was led by Ohio, which has been dogged by fraudulent filings. There were also large decreases in California and Illinois.

Claims shot up in the second week of March, likely as backlogs after severe winter storms in Texas and other parts of the densely populated South region were processed.

The deep freeze in the second half of February, which also gripped other parts of the country, depressed retail sales, homebuilding, production at factories, orders and shipments of manufactured goods last month.

Warmer weather, the White House’s $1.9 trillion COVID-19 pandemic rescue package and increased vaccinations are expected to boost activity in March. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell struck an optimistic note on the economy at an appearance before lawmakers this week.

U.S. stocks opened lower. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.

CORPORATE PROFITS FALL

But the massive fiscal stimulus, which extended government-funded unemployment aid, including a $300 weekly supplement, through Sept. 6, could keep claims elevated as some people reapply for benefits. Rampant fraud has also pushed filings higher. Claims surged to a record 6.867 million in March 2020.

Just over a year after the pandemic barreled across the United States, jobless claims remain above their 665,000 peak during the 2007-09 Great Recession. In a healthy labor market, claims are normally in a 200,000 to 250,000 range.

Employment is 9.5 million jobs below its peak in February 2020. Economists say it could take at least two years for the economy to recover all the 22.4 million jobs lost in March and April last year.

It could even take longer for the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, to rebound significantly. The participation rate is near a 47-year low, with women accounting for the biggest share of dropouts.

The claims report also showed that people receiving benefits after an initial week of aid dropped 264,000 to 3.870 million in the week ended March 13. But the decline in the so-called continuing claims was partly due to people exhausting their eligibility for benefits, limited to 26 weeks in most states.

At least 5.551 million people were on extended benefits during the week ended March 6, up 734,692 from the prior period. Another 1.068 million were on a state program for those who have exhausted their initial six months of aid.

The government also confirmed on Thursday that the economy lost considerable momentum at the end of last year amid a flare- up in new coronavirus infections and delays in providing more fiscal stimulus.

Gross domestic product increased at a 4.3% annualized rate, the Commerce Department said in its third estimate of fourth-quarter GDP growth. That was up from the 4.1% pace reported last month but a sharp deceleration from the record 33.4% rate logged in the third quarter.

Corporate profits were weak last quarter. After-tax profits without inventory valuation and capital consumption adjustment, which correspond to S&P 500 profits, contracted at a 1.7% rate after accelerating at a 36.1% pace in the third quarter. Profits fell 3.3% in 2020 after rising 1.8% in 2019.

But that is all history. The economy is forecast to grow by as much as a 7.5% rate in the first quarter. Growth this year is expected to top 7%. That would be the fastest growth since 1984 and would follow a 3.5% contraction last year, the worst performance in 74 years.

“We believe there is ample room for corporate profits to rise as company revenues pick up markedly and margins remain well supported,” said Lydia Boussour, lead U.S. economist at Oxford Economics in New York. “Improving health conditions, expanding vaccine distribution, and generous fiscal stimulus will form a powerful growth cocktail.”

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. weekly jobless claims drop to four-month low

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for jobless benefits dropped to a four-month low last week as an improving public health environment allows more segments of the economy to reopen, putting the labor market recovery back on track.

Still, a full recovery from the deep scars inflicted by the COVID-19 pandemic will probably take years, with the weekly unemployment claims report from the Labor Department on Thursday also showing a whopping 20.1 million Americans collecting unemployment checks in late February.

“The economy and the labor market are entering the next phase of the rebound, supported by a ramping up of vaccinations and declining infections that will allow for a resumption of activity,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

Initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 712,000 for the week ended March 6, the lowest level since early November. Data for the prior week was revised to show 9,000 more applications received than previously reported.

Economists polled by Reuters had forecast 725,000 applications in the latest week.

Unadjusted claims dropped 47,170 to 709,458 last week, amid declines in Texas, New York and Mississippi, where claims had been boosted in the prior period by harsh weather. Claims rose in Ohio, which has been plagued by fraudulent applications.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state programs, 1.2 million people filed claims last week.

U.S. stocks opened higher. The dollar fell against a basket of currencies. U.S. Treasury prices were mixed.

INFECTIONS FALLING

New coronavirus infections have dropped for eight straight weeks, declining 12% last week, according to a Reuters analysis of state, county and CDC data. Vaccinations jumped to a record 2.2 million shots per day and virus-related deaths fell 18%.

That, together with nearly $900 billion in additional pandemic relief money advanced by the government in late December, fired up consumer spending and hiring in February after declining in December.

Domestic demand is expected to surge in the months ahead, after Congress approved President Joe Biden’s $1.9 trillion recovery package, which will send fresh aid to small businesses as well as one-time $1,400 checks to mostly lower- and middle-income households. It will also extend a government-funded $300 weekly unemployment supplement through Sept. 6.

Jobless claims have been slow to decline with the improvement in economic activity and public health because of issues ranging from fraudulent filings and backlogs to recent winter storms in the South.

Though claims have dropped from a record 6.867 million in March 2020 when the pandemic hit the United States just more than a year ago, they are above their 665,000 peak during the 2007-09 Great Recession and could remain elevated because of the expanded unemployment benefits. In a well-functioning labor market, claims are normally in a 200,000 to 250,000 range.

“There is some risk in our view though that expanded unemployment, with benefits of an additional $300 per week, could keep the level of claims for unemployment benefits more elevated this year, as some workers could earn more on unemployment than in their previous jobs,” said Andrew Hollenhorst, an economist at Citigroup in New York.

Regular state unemployment benefits averaged about $346 per week in January. Together with the weekly $300 subsidy, they add up to $646 per week or over $15 per hour for a 40-hour week.

The federal minimum wage is $7.25 per hour, though some states have higher rates.

The claims report also showed the number of people receiving benefits after an initial week of aid declined 193,000 to 4.144 million during the week ended Feb 27. The decrease largely reflected people exhausting their eligibility for benefits, limited to 26 weeks in most states.

About 5.455 million people were on the government-funded extended benefits program during the week ended Feb. 20, up 986,351 from the prior week. There number of people on unemployment benefits under all programs during that period increased by 2.087 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci)

Analysis: Urban states come out ahead, rural states get less in Biden’s COVID-19 relief bill

By Andy Sullivan and Jason Lange

WASHINGTON (Reuters) – The $1.9 trillion COVID-19 relief package now making its way through the U.S. Congress would provide $350 billion to help pandemic-hit state and local governments balance their budgets, more than twice the amount lawmakers approved last year.

But not every state comes out ahead: urban, Democratic-led states like Connecticut, New York and Massachusetts that took drastic steps to stop the coronavirus’ spread would get about three times as much money per person as they did in the package passed at the beginning of the health crisis in March.

Rural, Republican-led states including Wyoming, North Dakota and South Dakota that did less would see less cash.

That’s because Congress is giving greater weight to poverty and unemployment this time as it considers how to distribute money to keep police, firefighters and other public employees on the job during a pandemic that has killed more than 500,000 Americans and thrown millions out of work.

It also reflects the fact that Democrats who control both chambers of Congress drafted the package for their fellow Democrat President Joe Biden without Republican input.

Under the new bill, named the American Rescue Plan, 61% of the aid would end up in states that voted for Biden in November, up from 56% in the bipartisan CARES Act passed last March.

Reuters examined House Oversight Committee projections on how much direct fiscal aid each state would receive in the bill, which is set for a vote in the House of Representatives this week before moving to the Senate.

It is expected to pass, even if no Republicans vote for it.

The CARES Act distributed $140 billion to state and local governments based on population, delivering a minimum of $1.25 billion to each state. That gave the largest per-capita benefits to the states with the smallest populations, including Wyoming and Vermont. Another $3 billion was set aside for Washington, D.C., and U.S. territories.

This time around, Democrats have lowered the per-state minimum to $500 million. The remaining $300 billion would be allocated based on unemployment and poverty levels as well as population. Tribal governments and territories would get $24.5 billion. Washington, D.C., would be treated like a state.

Advocates say the new formula ensures the money goes where it is needed, as COVID-19’s toll has been uneven across the country. Unemployment in December topped 9% in tourism-dependent Nevada and Hawaii, triple the 3% in Nebraska and South Dakota.

“This is a more targeted approach,” said Michael Leachman, a budget expert at the left-leaning Center on Budget and Policy Priorities, who supports additional state and local aid.

Republicans say the bill short-changes states that have imposed fewer coronavirus-related restrictions.

“The real reason for this bill is to send billions to bail out blue-state governors and reward their harmful lockdown policies,” Representative Jason Smith of Missouri said at a House Budget Committee hearing on Monday.

The new bill would direct roughly $800 per person to Republican-led Utah and Alabama, which had some of the least restrictive COVID-19 responses, according to Oxford University researchers.

It would send roughly $1,200 per person to Democratic-led Massachusetts and New York, among the most restrictive.

Democrats argue that the money should be targeted towards areas that have suffered the most.

“Since when is unemployment not a legitimate indicator of economic distress?” Representative David Price, a Democrat from North Carolina, said at the same hearing.

A DIVISIVE SUBJECT

State and local aid has proven to be one of the most divisive aspects of the multi-trillion dollar effort Washington has mounted in the past year to fight the virus and keep the world’s largest economy afloat.

Republicans and Democrats both broadly supported small-business loans and direct payments to families.

But Republicans have balked at providing more aid to state and local governments. State and local aid was excluded from a bipartisan $900 billion bill that passed in December.

The National Association of State Budget Officers calculated state revenues would drop 10.8% in the current fiscal year when compared with pre-pandemic estimates, affecting Republican-led and Democratic-led states alike.

Some analysts say the Democrats’ proposal, which adds up to about $500 billion when spending for public schools, transit and other aid is included, provides states with more than they need, however.

“People dramatically overestimated how bad the state and local finances would be,” Stan Veuger, an economist at the center-right American Enterprise Institute.

Bipartisan groups like the National Governors Association have argued that further aid is needed to help states deliver health care and education and avoid further layoffs that could prolong the recovery, though they have not endorsed specific proposals.

Though the new bill would steer more money towards large states, smaller states still fare well. Vermont, Wyoming, Alaska and North Dakota, each with fewer than 1 million residents, are still among the top 10 recipients on a per capita basis.

(Reporting by Jason Lange and Andy Sullivan; Editing by Scott Malone and Sonya Hepinstall)

Subsiding layoffs raise cautious optimism for U.S. labor market

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits decreased further last week, suggesting the labor market was stabilizing as authorities started to loosen pandemic-related restrictions on businesses.

Despite the signs that layoffs are abating, the weekly jobless claims report from the Labor Department on Thursday showed at least 17.8 million Americans were on benefits in mid-January, indicating that long-term unemployment was likely becoming entrenched. That could boost President Joe Biden’s push for the U.S. Congress to pass his $1.9 trillion recovery plan.

Treasury Secretary Janet Yellen told ABC’s Good Morning America that the massive stimulus plan was needed to overcome the economic pain caused by the COVID-19 pandemic.

“It’s too early to predict that this begins a strong reversal of excruciatingly high layoffs,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Another round of stimulus is important.”

Initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 779,000 for the week ended Jan. 30. That was the third straight weekly decline. Economists polled by Reuters had forecast 830,000 applications for the latest week.

Unadjusted claims decreased 23,525 to 816,247 last week. Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.165 million people filed claims last week, down from 1.243 million in the prior period.

Claims remain above their 665,000 peak during the 2007-2009 Great Recession, but well below the record 6.867 million last March when the pandemic hit the United States.

Part of the elevation in claims reflects people re-applying for benefits after the government in late December renewed a $300 unemployment supplement until March 14 as part of a pandemic relief package worth nearly $900 billion.

“The decline in new claims in recent weeks adds to the evidence that the worst months for the labor market could very well be behind us,” said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Stocks on Wall Street were trading higher. The dollar rose against a basket of currencies. U.S. Treasury prices were mostly lower.

LAYOFFS SUBSIDING

Though January was the worst month since the onset of the pandemic, the decline in economic activity leveled off in the second half of the month amid signs of a peak in the recent coronavirus wave.

Data from Homebase, a payroll scheduling and tracking company, showed its measure of employees at work flattened out over the last two weeks of January, pausing the decline observed from December into January.

Other data on Thursday from global outplacement firm Challenger, Gray & Christmas showed planned job cuts announced by U.S.-based employers rose only 3.3% to 79,552 in January.

The claims report also showed the number of people receiving benefits after an initial week of aid dropped 193,000 to 4.592 million during the week ended Jan. 23. About 17.836 million people were on unemployment benefits on all programs in mid-January, down from 18.322 million in the first week of 2021.

Last week’s claims data has no bearing on Friday’s closely watched employment report for January, as it falls outside the survey period, which was in the middle of the month. Still, the signs of stability in other labor market measures support expectations that hiring rebounded in January after the economy shed jobs in December for the first time in eight months.

Hopes that the economy created jobs last month were boosted by reports on Wednesday showing rebounds in private payrolls and services industry employment in January. A survey this week also showed manufacturers hired more workers in January.

According to a Reuters poll of economists payrolls likely increased by 50,000 jobs in January after declining by 140,000 in December. In the wake of the fairly upbeat reports, Goldman Sachs lifted its payrolls forecast by 75,000 to 200,000.

But some economists are bracing for a second straight month of job losses in January. The Conference Board’s survey last week showed consumers’ perceptions of labor market conditions deteriorated further last month.

The economy has recouped 12.5 million of the 22.2 million jobs lost in March and April. The Congressional Budget Office estimated on Monday that employment would not return to its pre-pandemic level before 2024.

Economists were unperturbed by a separate report on Thursday from the Labor Department showing worker productivity dropped at a 4.8% annualized rate in the fourth quarter. That was the deepest pace of decline since the second quarter of 1981 and followed a 5.1% pace of expansion in the third quarter. The pandemic has caused wild swings in productivity.

“This decline came after very strong productivity growth in the middle quarters of the year, and we think that the pandemic has led to a shift in economic activity away from some low-productivity sectors that has led to firming in productivity growth through some of the noise in the quarterly readings,” said Daniel Silver, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

Under Biden order, workers refusing unsafe work could stay on unemployment aid

By Ann Saphir and Jonnelle Marte

(Reuters) – Many workers called back by employers resuming or expanding operations despite the ongoing coronavirus pandemic face a dilemma: return to jobs that put them at high risk of the virus, or say no, and risk going without pay or unemployment benefits.

President Joe Biden argues workers should not have to make that choice.

An executive order signed on his second full day in office could make it easier for people to still qualify for jobless benefits if they quit or refuse a job that puts them at undue risk of infection from the coronavirus.

More than 18 million Americans are drawing some form of government unemployment assistance.

The order asks the U.S. Department of Labor to clarify that workers who refuse jobs due to unsafe working conditions can still receive unemployment insurance. A department spokesman told Reuters the agency is developing an Unemployment Insurance Program Letter – the usual mechanism for issuing guidelines or clarifying policies – in response to the order.

The Labor Department also issued new guidance on Friday with recommendations on how employers can protect workers from the virus, which has infected more than 25 million Americans and led to more than 433,500 U.S. deaths since the pandemic began.

“In a period where lots of people have lost jobs and people are desperate for work, people will go and end up working under dangerous conditions and they will do so believing they have no other alternative,” said Ken Jacobs, chair of the UC Berkeley Labor Center.

Assuring them they have the right to refuse unsafe work, and paying them enough to afford not to work, is “vitally important,” Jacobs said. “You want people in the greatest risk groups to stay home.”

SEEKING CLARITY

It’s not clear how many workers have lost unemployment benefits after refusing jobs because of COVID-19 safety concerns, said Andrew Stettner, a senior fellow at The Century Foundation and an expert on unemployment insurance. Still, the new guidance should establish minimum protections for workers, replacing an approach that can vary by state, he said.

“It’s been very unclear for a claimant to understand whether they can refuse an offer to go back to work,” Stettner said.

Currently some states, including Texas, publish lists of the circumstances in which a worker might be able to keep receiving benefits after turning down a job. For instance, the state offers exceptions for workers age 65 and up, or those with health conditions that put them at high risk.

But other states advise workers of a narrower set of protections, and many make decisions on a case by case basis.

“The goal would be to have some clear standards,” Stettner said.

The new federal guidance, likely to be issued in the coming weeks, would be aimed at making both states and workers aware they should be able to qualify for unemployment benefits after refusing a job that puts them at greater risk because of their age, a health condition or lack of COVID-19 safety protocols, analysts say.

‘WE NEED A STANDARD’

That policy could make a big difference for people in jobs at restaurants or other businesses requiring workers to be in close proximity to others, two recent studies suggest.

Essential workers were 55% more likely to get infected with coronavirus than those who stayed at home, according to a study of the early months of the pandemic in Pennsylvania published this week by researchers at Independence Blue Cross and the Wharton School of Business.

“We all had a hunch that essential workers by the nature of their jobs are probably more exposed, which means they’re probably more likely to get infected – but what we didn’t know was by how much,” said Wharton’s Hummy Song, one of the paper’s authors.

A separate study out last week from the University of California found deaths of working-age Californians increased by 22% in 2020 from what would have been expected based on prior trends, and the deaths were concentrated in certain occupations.

Deaths among workers in food and agriculture, for instance, were 39% higher. Among healthcare workers, deaths were up 20%, the study noted.

The findings indicate there may be better protections in place in health care settings than in restaurants or other fields, said Yea-Hung Chen, one of the study’s authors.

New guidance from the Biden administration could help workers in at least some of those higher-risk sectors keep unemployment benefits and avoid unsafe work – even as it puts pressure on companies to make workplaces safer, said University of California, Berkeley professor Jesse Rothstein.

“We need a standard,” said Rothstein. “The DOL has been AWOL for the last year.”

(Reporting by Jonnelle Marte in New York and Ann Saphir in San Francisco; Editing by Dan Burns and Diane Craft)

U.S. labor market gradually healing; housing, manufacturing power ahead

By Lucia Mutikani

WASHINGTON (Reuters) – 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.

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 major challenges confronting President Joe Biden and his new administration.

Initial claims for state unemployment 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.

Unadjusted claims dropped 151,303 to 960,668 last week. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the economic shock caused by the pandemic. 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.

Consumers are also hunkering down at home, leading to a weakening in demand. COVID-19 has infected more than 24 million people, with the death toll exceeding 400,000 since the pandemic started in the United States.

U.S. stocks opened higher as investors bet on more pandemic relief and speedy vaccine rollouts under the Biden administration. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.

Some of the elevation in claims reflects people re-applying for benefits following the government’s recent renewal of a $300 unemployment supplement until March 14 as part of the nearly $900 billion in additional fiscal stimulus. Programs for the self-employed, gig workers as well as those who have exhausted their benefits were also extended.

Claims data is also difficult to adjust for seasonal fluctuations at the start of the year, a task that has been made even harder given the shock caused by the coronavirus.

MOMENTUM WANING

Nevertheless, recent data have shown the labor market recovery has stalled. The claims data covered the week during which the government surveyed establishments for the nonfarm payrolls component of January’s employment report. Claims were little changed between the December and January survey period.

The economy shed 140,000 jobs in December, the first job losses since April when authorities throughout the country enforced stay-at-home measures to slow the spread of the virus. Retail sales fell for a third straight month in December.

Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession.

The claims report showed the number of people receiving benefits after an initial week of aid decreased 127,000 to 5.054 million during the week ending Jan. 9.

About 16 million people were on unemployment benefits under all programs at the start of the year. The economy has recovered 12.4 million of the 22.2 million jobs lost in March and April. Economists say it could take several years for the labor market to recover from the pandemic.

In a separate report on Thursday, the Commerce Department said housing starts jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month, the highest level since September 2006. Economists had forecast starts would rise to a rate of 1.560 million units in December. Starts totaled 1.380 million in 2020, up 7.0% from 2019.

Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December, the highest since August 2006. Permits, which typically lead starts by one to two months, totaled 1.452 million last year, a 4.8% increase from 2019.

The housing market is being underpinned by cheaper mortgages and an exodus from city centers to suburbs and other low-density areas as companies allow employees to work from home and schools shift to online classes because of the pandemic. About 23.7% of the labor force is working from home.

A third report from the Philadelphia Federal Reserve showed its business conditions index soared to a reading of 26.5 this month from 9.1 in December. A measure of new orders at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware, vaulted to a reading of 30.0 from 1.9 in December.

Factory employment measures also improved. While manufacturers reported paying more for raw materials, they were also able to increase prices for their goods. Manufacturers were upbeat about capital investment plans in the six months ahead.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

COVID-19, renewed benefits boost U.S. weekly jobless claims

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing first-time applications for unemployment benefits surged last week, confirming a weakening in labor market conditions as a worsening COVID-19 pandemic disrupts operations at restaurants and other businesses.

The larger-than-expected increase in weekly unemployment claims reported by the Labor Department on Thursday was seen by some economists as driven by the recent renewal of supplemental jobless benefits, but nonetheless raised the risk of further job losses in January after nonfarm payrolls slumped in December for the first time in eight months.

“The economy clearly needs additional support from Washington because right now rising jobless claims tells us the labor market recovery has stalled and the direction is full-tilt down,” said Chris Rupkey, chief economist at MUFG in New York.

Initial claims for state unemployment benefits increased 181,000 to a seasonally adjusted 965,000 for the week ended Jan. 9, the highest since late August. Economists polled by Reuters had forecast 795,000 applications in the latest week.

Unadjusted claims shot up 231,335 to 1.151 million last week. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the economic shock caused by the pandemic. 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.

U.S. stocks opened higher as investors awaited details of Biden’s rescue plan. The dollar rose against a basket of currencies. U.S. Treasury prices were lower.

STRICTER MEASURES

The surge in claims last week also likely reflected reapplications for benefits following the government’s renewal of a $300 unemployment supplement until March 14 as part of the latest stimulus package. Government-funded programs for the self-employed, gig workers and others who do not qualify for the state unemployment programs as well as those who have exhausted their benefits were also extended.

“Not all individuals eligible for unemployment assistance actually claim benefits, and the supplementary payments add an incentive to file for benefits,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.

Authorities in many states have banned indoor dining to slow the spread of the coronavirus. The economy shed jobs in December for the first time in eight months.

The Federal Reserve’s Beige Book report of anecdotal information on business activity collected from contacts nationwide in early January showed on Wednesday that “contacts in the leisure and hospitality sectors reported renewed employment cuts due to stricter containment measures.”

The central bank also noted that the resurgence in the coronavirus was causing staff shortages in the manufacturing, construction and transportations sectors. The virus has infected more than 22.5 million people in the United States and killed over 376,188, the most of any country.

Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession. Economists say it could take several years for the labor market to recover from the pandemic.

The claims report showed the number of people receiving benefits after an initial week of aid increased 199,000 to 5.271 million during the week ending Jan. 2. At least 18.4 million were on unemployment benefits on all programs in late December.

Labor market stress could curb inflation amid signs of rising price pressures. In a separate report on Thursday, the Labor Department said import prices jumped 0.9% in December after rising 0.2% in November. Import prices were boosted by higher prices for energy products and recent dollar weakness.

Economists had forecast import prices, which exclude tariffs, accelerating 0.7% in December. In the 12 months through December, import prices slipped 0.3% after dropping 1.0% in November.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Lebanon tightens lockdown, imposes 24-hour curfew, as hospitals buckle

BEIRUT (Reuters) – Lebanon announced a tightening of its lockdown on Monday, introducing a 24-hour curfew from Thursday as COVID-19 infections overwhelm its medical system.

The new all-day curfew starts at 5 a.m. (0300 GMT) on Thursday and ends at 5 a.m. on Jan. 25, a statement by the Supreme Defense Council said.

Lebanon last week ordered a three-week lockdown until Feb. 2 that included a nighttime curfew from 6 p.m. to 5 a.m.  But tighter measures were now necessary as hospitals run out of capacity to treat critically ill patients, President Michel Aoun said in the statement. “We have seen dreadful scenes of citizens waiting in front of hospitals for a chair or a bed,” he said.

The new measures also include stricter procedures at the airport for passengers arriving from Cairo, Addis Ababa, Baghdad, Istanbul and Adana. Travelers arriving from these destinations will have to quarantine for seven days at a hotel while all others will quarantine up to 72 hours. Overall air traffic at the airport will also be cut to 20% from normal operating levels and supermarkets will be limited to delivery services.

Anticipation of stricter measures on Monday had driven many Lebanese to wait in long queues in front of supermarkets and empty shelves.

Lebanon registered 3,743 new infections on Sunday, bringing its total to 219,296 cases and 1,606 deaths since Feb. 21.

Adherence to social distancing and other preventive measures has been lax prompting government fears of a significant rise in cases after the Christmas and New Year holidays.

Daily infections reached an all time high of 5,440 on Friday.

“Sadly we are being faced with a frightening health situation,” Caretaker Prime Minister Hassan Diab said. “The corona pandemic is out of control because of the stubbornness of people and their rebellion against measures we take to protect them from its dangers.”

The lockdown faces resistance amid concerns over soaring unemployment, inflation and poverty.

Lebanon is still dealing with a devastating financial crisis that has crashed the currency, paralyzed banks, and frozen savers out of their deposits.

Medical supplies have dwindled as dollars have grown scarce.

(Reporting By Maha El Dahan and Laila Bassam; Editing by Toby Chopra)