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People line up outside a Kentucky Career Center in Frankfort, Ky., on June 18, 2020.Bryan Woolston/Reuters

The number of Americans filing first-time claims for jobless benefits fell last week, but remained extraordinarily high amid widespread business restrictions to slow a rising tide of new COVID-19 infections and lack of additional fiscal stimulus.

The weekly unemployment claims report from the Labour Department on Thursday included the U.S. Thanksgiving holiday, which could have affected the model the government uses to strip seasonal fluctuations from the data.

“Jobless claims continue to signal a struggling labour market recovery, and as we approach the end of the year, risks are mounting that millions of unemployed workers will lose access to their unemployment benefits,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pa.

Initial claims for state unemployment benefits decreased 75,000 to a seasonally adjusted 712,000 for the week ended Nov. 28, the Labour Department said on Thursday. Economists polled by Reuters had forecast 775,000 applications in the latest week.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 937,525 people filed claims last week.

A government watchdog on Monday said the claims data was inaccurate as the Labour Department was using traditional estimates, which were not appropriate given the economic shock caused by the coronavirus pandemic.

The Government Accountability Office said state backlogs in processing applications had led to people submitting claims for multiple weeks of retroactive benefits during single reporting periods, inflating the claims data. Unemployment claims hit a record 6.867 million in March and have been stuck above their 665,000 peak during the 2007-2009 Great Recession.

Despite the problems with the data, the elevated claims mirrored a weakening in other labour market indicators, reflecting the impact of the COVID-19 resurgence and a largely depleted fiscal stimulus.

“Even with inaccuracy, the ballpark size of total initial claims underscores that COVID-19 continues to inflect deep economic pain,” said AnnElizabeth Konkel, an economist at Indeed Hiring Lab in Washington. “With record virus cases combined with few outdoor options for businesses because of winter, the pain will continue.”

The United States is in the midst of a fresh wave of COVID-19 infections, with 4.2 million new cases and more than 35,000 coronavirus-related deaths reported in November, according to a Reuters tally of official data.

More than US$3-trillion in government COVID-19 relief helped millions of unemployed Americans cover daily expenses and companies keep workers on payrolls, leading to record economic growth in the third quarter. About 13.6 million people are slated to lose government-funded unemployment benefits a day after Christmas.

Republicans and Democrats in Congress remained unable to reach agreement on a fresh relief package on Wednesday, with top Republicans pushing what the Senate’s top Democrats dismissed as an “inadequate, partisan proposal.”

Though the number of people receiving benefits after an initial week of aid declined 569,000 to 5.520 million in the week ending Nov. 21, that was because many had exhausted their eligibility, which is limited to six months in most states. The pace of decline in the so-called continuing claims has also slowed, suggesting a moderation in job growth.

A record 4.569 million workers filed for extended unemployment benefits in the week ending Nov. 14, up 59,732 from the prior week. At least 20.1 million people were receiving benefits under all programs in mid-November.

The labour market stagnation has been evident in other data.

A survey from the Institute for Supply Management on Tuesday showed its measure of factory employment contracted in November after expanding in October for the first time since July, 2019.

Manufacturers reported high rates of absenteeism and difficulties returning people to work and hiring staff owing to COVID-19. On Wednesday, the ADP National Employment Report showed a rise in private payrolls that was below expectations in November.

The Federal Reserve’s “Beige Book” report of anecdotal information on business activity collected from contacts across the nation, showed employment rising in all districts on or before Nov. 20, but the U.S. central bank noted “for most, the pace was slow, at best.”

The reports support expectations that job growth slowed further in November. According to a Reuters survey of economists, the government’s closely watched employment report on Friday is likely to show that farm payrolls increased by 469,000 jobs last month after rising 638,000 in October.

That would the smallest gain since the jobs recovery started in May and leave employment 9.609 million below its peak in February. Job growth peaked at a record 4.781 million in June.

The economy grew at a historic 33.1-per-cent annualized rate in the third quarter after shrinking at a 31.4-per-cent rate in the April-June period, the deepest since the government started keeping records in 1947. Growth estimates for the fourth quarter are mostly below 5 per cent.

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