The US job market is gradually healing; housing, manufacturing power ahead

WASHINGTON (Reuters) – The number of Americans filing new unemployment benefits fell modestly last week as the COVID-19 pandemic shocked the nation, increasing the risk of the economy leaving work for the second. consecutive month in January.

Despite the labor market difficulties, the economy remains anchored in a strong manufacturing and real estate sector. Other data from Thursday showed that home construction and permits for future residential construction increased in December to levels last seen in 2006. Factory activity in the Central Atlantic region accelerated this month, with manufacturers who reported a boom in new orders.

The service sector has borne the brunt of the coronavirus crisis, with a disproportionate impact on low-income workers, who tend to be women and minorities. Addressing the so-called K-shaped recovery, in which the best-paid workers are doing well while the lowest-paid workers are losing ground, is one of the main challenges that President Joe Biden and his new administration face.

Initial claims for state unemployment dropped from 26,000 to 900,000 seasonally adjusted for the week ending Jan. 16, the Labor Department said. Economists interviewed by Reuters had forecast 910,000 questions in the past week.

Unadjusted complaints fell from 151,303 to 960,668 last week. Economists prefer the unadjusted number due to previous difficulties in adjusting claims data for seasonal fluctuations due to the economic shock caused by the pandemic. Including a government-funded program for self-employed, gig workers, and others who don’t qualify for regular state unemployment programs, 1.4 million people applied last week.

Out of control coronavirus infections are disrupting operations in businesses such as restaurants, gyms and other establishments where crowds tend to gather, reducing working hours for many workers and pushing others out of work.

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

US equities opened higher as investors bet on greater relief from the pandemic and rapid launch of vaccines under the Biden administration. The dollar fell against a basket of currencies. US Treasury prices were lower.

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

Claims data are also difficult to adjust for seasonal fluctuations at the start of the year, a task made even more difficult given the shock caused by the coronavirus.

MOMENT THAT GOES DOWN

However, recent data has shown that the labor market recovery has stalled. The data on complaints covered the week that the government surveyed factories for the non-farm payroll component of the January employment report. The claims changed little between the December and January survey period.

The economy lost 140,000 jobs in December, the first job loss since April, when authorities across the country applied home-based measures to slow the spread of the virus. Retail sales fell for a third consecutive month in December.

Although jobless claims have declined from a record 6.867 million in March, remain above their peak of 665,000 during the Great Recession of 2007-2009.

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

At the beginning of the year, some 16 million people were receiving unemployment benefits under all programs. The economy made up 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 start jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month, the highest level since September 2006. The economists they predicted that starts would increase at a rate of 1.560 million units in December. Goodwill amounted to 1,380 million in 2020, up 7.0% from 2019.

Permits for future residential construction increased 4.5% to a rate of 1.709 million units in December, the highest since August 2006. Permits, which typically lead to a one to two month start, were 1,452 million last year, an increase of 4.8% from 2019.

The real estate market is supported by cheaper mortgages and an exodus from from urban centers to suburbs and other low-density areas as companies allow employees to work from home and schools switch to online courses due to the pandemic. About 23.7% of the workforce works from home.

A third relationship from the Philadelphia Federal Reserve showed that its Economic Conditions Index rose to a reading of 26.5 this month from 9.1 in December. A measure of new orders at factories in the region covering eastern Pennsylvania, southern New Jersey and Delaware, at a reading of 30.0 from 1.9 in December.

The measures for factory employment have also improved. Although the producers said they paid more for raw materials, they were also able to raise the prices of their products. Manufacturers have been optimistic about capital investment plans over the coming six months.

Reporting by Lucia Mutikani; Editing by Andrea Ricci