U.S. Unemployment Claims Remain Elevated as Recovery Slows

Nearly 900,000 workers applied for jobless benefits last week, extending recent increases in another sign the economy is entering a winter slowdown.

Unemployment claims rose to 885,000 from 862,000 a week earlier, the Labor Department said Thursday.

More broadly, claims are down sharply from a peak of nearly 7 million in March, but the four-week moving average, which smooths out weekly volatility, recently increased after trending downward since the spring. The weekly figures can be volatile around the holidays due to seasonal-adjustment issues.

“The next few months will be pretty rough for the labor market as you do see businesses having to contend with this latest wave of Covid cases,” Sarah House, senior economist at Wells Fargo Securities, said. “You are seeing those government restrictions coming into play again.”

Ms. House, and many other economists, project the labor market will cool until vaccines are widely distributed. More than 90% of economists in a recent Wall Street Journal survey said they expect the rollout of coronavirus vaccines will cause hiring to accelerate in the second quarter of next year.

Economic data broadly point to a slowdown. Retail sales dropped 1.1% in November from a month earlier, according to a Commerce Department report Wednesday. Overall consumer spending, which includes retail and services consumption, has continued to increase, but more slowly than over the summer.

Job growth cooled in November as many Americans gave up looking for work. Robust job gains in the late spring and early summer largely reflected businesses adding back staff after lockdowns were lifted. But the recovery is far from complete, and many businesses continue to operate below capacity. Some state and local governments implemented new restrictions as coronavirus cases surged this fall.