US reports sharpest rise in unemployment since Covid onset – Firstpost

The unemployment benefit claims in the United States were the highest in the week ending December 6 in four and a half years.

While economists have warned against drawing many conclusions from the data, the surge in unemployment claims at a time when nationwide layoffs are the highest in years has sparked concerns.

In the week ending December 6, unemployment benefit claims rose 44,000, the biggest jump since July 2021, to 236,000, according to the Labor Department.

This was way above the forecast of 220,000 by economists whom Reuters had polled.

The unemployment benefit claims have surged at a time when nationwide layoffs in October were the highest since early 2023.

Some economists cautioned that such spikes in the holiday season are always expected. They pointed that the previous week had seen a sharp drop in unemployment benefit claims. They suggested that the focus should be on the four-week average instead of weekly data.

But data could be hider bigger unemployment as well

At the same time, there are concerns that that even this data —unemployment benefit claims rising to the highest point since the Covid-19 pandemic— may be undercounting the extent of unemployment in the United Stats.

It is a surprising that recent layoff announcements have not translated into a shift higher in initial claims, according to Nancy Vanden Houten, the lead US economist at Oxford Economics.

“It may be that some workers who have lost their jobs have received generous severance packages or have found other employment, although that is more difficult in the current labor market with a depressed rate of hiring,” Houten told Reuters.

As economists have described the labour market in a state of ’no-fire, no-hire’ state, a deeper-than-reported unemployment would mean the economy might be worse than it appears to be at the moment.