Applications for U.S. unemployment benefits unexpectedly fell last week to the lowest since March, offering a ray of hope for an economy still battered by the pandemic.
Initial jobless claims in regular state programs fell by 249,000 to 1.19 million in the week ended Aug. 1, Labor Department data showed Thursday.
That was the largest improvement in almost two months. Continuing claims — the total number of Americans claiming ongoing unemployment benefits in those programs — decreased to 16.1 million in the week ended July 25, the lowest since April.
Even with the drop, initial claims were more than five times pre-crisis levels. Analysts have cautioned that it could take some time to confirm a sustainable trend in improvement — especially if the expiration of the weekly US$600 in federal benefits discouraged some from filing claims.
With cumulative job losses numbering in the tens of millions, it will take not just steady improvement in the number of weekly claims, but also in hiring, for the labor market to rebound to any semblance of its pre-pandemic state.
“A combination of uncertainty from rising virus cases to the withdrawal of financial support is concerning for an already fragile recovery,” said Daniel Zhao, senior economist at jobs website Glassdoor. “The economy is still in deep risk of falling sideways — where conditions improve so sluggishly that the effects of the crisis become increasingly permanent.”
The labor market had been showing signs of stalling in recent weeks as a resurgence in virus cases, beginning in mid-June, led a slew of states to halt or even reverse reopenings. That surge has begun to ebb, potentially supporting hiring, but the outlook could deteriorate once again as businesses exhaust funds from the Paycheck Protection Program.
Meanwhile, the extra US$600 in weekly jobless benefits that have helped keep incomes and spending afloat in recent months has expired, threatening the fragile economic rebound.
Lawmakers and the White House are struggling to agree on a new stimulus package that would once again bolster the size of millions of Americans’ unemployment checks, but even with a deal, it could take several weeks for the unemployed to actually see that money. Such a gap would further strain families who have depleted their savings and are unsure on how they will afford their next rent payment.
What Bloomberg’s Economists Say
“It will take several weeks to judge whether this is the start of a renewed trend toward improvement, or a blip within the current pattern of slowing job-market recovery. Layoffs remain well above even the Great Recession high, threatening the overall outlook.”
— Eliza Winger
Read the full reaction note.
Data out Wednesday from the ADP Research Institute showed hiring at U.S. companies remained positive in July, but the pace of job growth slowed sharply, with some industries, like financial activities, even seeing small declines.
The monthly jobs report on Friday is expected to show a similar picture, with the median estimate calling for a 1.5 million monthly increase in nonfarm payrolls after a 4.8 million surge in June.
On an unadjusted basis, initial claims decreased to 984,192 nationwide, the first time since mid-March it dropped below 1 million. All states but Rhode Island, which showed little change, posted declines from the prior week. Even in states where coronavirus cases have been elevated, including California, Texas and Florida, applications for benefits fell in the latest week.
“The labor market basically hit a big pothole in July, but we also know that activity, there are still a bunch of sectors that are still doing reasonably well all things considered,” Neil Dutta, head of economic research at Renaissance Macro Research LLC, said on Bloomberg Television. The labor market should improve in August amid gains in housing and autos and the need for inventory restocking, he said.
In addition to applications for unemployment benefits in regular state programs, in the week ended Aug. 1, states reported 655,707 initial claims for Pandemic Unemployment Assistance, the lowest since April. That’s the federal program extending unemployment benefits to those not typically eligible like the self-employed.
As the pandemic drags on, more and more people are beginning to claim Pandemic Emergency Unemployment Compensation, the federal program that provides up to 13 additional weeks of jobless benefits to those who have exhausted their regular benefits. While most states offer 26 weeks of benefits, others, such as Florida and North Carolina offer less than half of that. More than 1.1 million people were claiming the aid in the week ended July 18.
The total number of people claiming benefits in all programs increased to 31.3 million in the week ended July 18, though this figure reflects states’ overcounts of reported PUA continued claims.
–With assistance from Sophie Caronello, Maeve Sheehey and Ana Monteiro.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
