First-time claims for unemployment benefits rose to 861,000 last week, in a setback to the US labour market’s recovery from a winter Covid-19 surge.

The number of jobless claims filed for regular state programmes increased by 13,000 in the week ending February 13, from 848,000 the previous week, the US labour department said on Thursday. Economists had expected claims to dip to 765,000. 

That came alongside a rise of 174,247 in claims for federal pandemic unemployment assistance (PUA) — which includes gig workers and the self-employed — to 516,299.

More than 18m Americans are seeking jobless benefits 11 months after the pandemic began, even as the US government is pushing ahead with its vaccine rollout in the hope of turning the page on the crisis. 

US president Joe Biden is also urging Congress to adopt his $1.9tn stimulus plan, saying the economy would “roar back” if the aid were approved. One-time stimulus payments made in December, part of the $900bn relief package approved late last year, helped push retail sales up by the most in seven months in January.

Republicans on Capitol Hill remain resistant to the idea of such a large bill and some economists, including economist Larry Summers, have flagged concerns about unhealthy jumps in inflation because of Biden’s stimulus.

Still, Federal Reserve officials think the threat posed by sluggish inflation is greater than the danger of rapidly rising prices and expect any uptick to be transitory. Fed chair Jay Powell has repeatedly stressed the importance of accommodative monetary policy to support the labour market.

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US employment remains nearly 10m below its pre-pandemic levels. Fed officials view the economy as being “far from” the central bank’s goals and have cautioned that the path ahead remains “highly uncertain, with the pandemic continuing to pose considerable risks to the outlook”. 



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