By Geoffrey Smith
Investing.com -- The number of people making initial claims for jobless benefits in the U.S. surged to their highest in nearly three months as the latest wave of the Covid-19 pandemic took an increasingly visible toll on the labor market.
The Labor Department said that 853,000 people filed initial jobless claims last week, up from 716,000 a week earlier. Analysts had expected a much smaller rise to only 725,000.
The number of people making continuing claims also rose for the first time since September, to 5.757 million from 5.527 million a week earlier. Continuing claims are reported with a one-week lag.
The numbers come at a time when the coronavirus is running largely out of control in the U.S., with sharp rises in the numbers of deaths and hospital admissions in recent weeks. The U.S. registered over 3,000 deaths from the disease for the first time on Wednesday. Although fatalities are concentrated largely in among (non-working) seniors, more and more parts of the economy are being shut down to protect them and the healthcare system treating them.
The data were released at the same time as other figures showing a slightly larger-than-expected increase in consumer prices in November. Prices rose 0.2% on the month rather than the 0.1% expected, although the annual rate of inflation remained at 1.6%.
Analysts argue that official data are currently understating actual price developments, as prices for food and other high-frequency services are increasing faster, while prices are falling fastest for discretionary services, which are being used less frequently. The rate of rent inflation also continued to fall.
Reflation "can only come on the back of a strong economy with rising purchasing power," said Julia Coronado, founder of MacroPolicy Perspectives and a former Federal Reserve economist, via Twitter. "Initial claims point to more pain on that front."