The United States saw 787,000 new applications for unemployment benefits in the final week of 2020, the Labor Department said Thursday, indicating layoffs remain widespread months into the coronavirus pandemic.

The total was just 3,000 less than the previous week, seasonally adjusted, but still nowhere near the record-low unemployment seen before Covid-19 broke out in the US in March, causing widespread business restrictions that crippled the economy.

Another 161,460 people, without seasonal adjustment, filed claims under a program for freelance workers not normally eligible for government benefits in the week ended January 2.

That was much lower than in prior weeks, but the program briefly lapsed in that period, before an extension took effect, meaning the total could rise again in coming weeks.

"The underlying story here is clear. A combination of Covid fear and state-mandated restrictions on activity in the services sector is squeezing businesses, and no real relief is likely until a sustained decline in pressure on hospitals emerges," said Ian Shepherdson of Pantheon Macroeconomics.

An increasing number of people in the United States are filing benefits under a program available only in some states with high unemployment, a worrying sign for long-term joblessness
An increasing number of people in the United States are filing benefits under a program available only in some states with high unemployment, a worrying sign for long-term joblessness GETTY IMAGES NORTH AMERICA / SPENCER PLATT

Analysts had expected a sharper fall in claims for the week, and Diane Swonk of Grant Thornton said the data indicate Friday's government employment report would show tepid job creation in the final month of the year.

"Brace (for) job creation to be flat-to-negative when the data (for) December comes out tomorrow," she wrote on Twitter. She projects a gain of 100,000 jobs, "which is not significantly different than zero for the month."

The business shutdowns beginning in March had sent the unemployment rate skyrocketing, and though it has decreased in recent months, the monthly reports from the Labor Department have shown the number of long-term unemployed steadily increasing.

The weekly report showed signs that trend is continuing, with an additional 148,651 people filing claims under the Extended Benefits program that is only available in states with high unemployment as of the week ended December 19.

All told, around 19.2 million people continued to receive aid from all government unemployment programs as of that week, the report said.

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