U.S. weekly jobless claims drop below one million; labor market still weak

The expiration of a $600 weekly jobless supplement at the end of July likely contributed to the decline in claims reported by the Labor Department on Thursday. Reports from payroll scheduling and workforce management firms suggested a decline in employment in early August due to the spread of new COVID-19 cases across the United States.

"Unemployment remains a huge problem for the U.S. economy," said Gus Faucher, chief economist at PNC Financial in Pittsburgh. "It could also be that the expiration of bonus unemployment payments of $600 per week at the end of July has discouraged some potential beneficiaries from applying for unemployment insurance, the expiration may also have encouraged some beneficiaries to leave unemployment and take a job."

Initial claims for state unemployment benefits decreased 228,000 to a seasonally adjusted 963,000 for the week ended Aug. 8. That was the lowest level since mid-March when authorities started shutting down non-essential business to slow the spread of the novel coronavirus. Economists polled by Reuters had forecast 1.12 million applications in the latest week.

Claims peaked at a record 6.867 million in late March.

New COVID-19 infections are spreading across the nation, forcing authorities in some of the hot spots to either shut down businesses again or pause reopenings.

Data from Homebase, a payroll scheduling and tracking company, showed a decline in employment last week. Figures from Kronos, a workforce management software company, showed a flattening in the number of shifts worked.

"Even as businesses have reopened and jobs have returned, layoffs are continuing to mount," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. "The risk of...