Another 898,000 Americans filed for unemployment aid last week as layoffs persist

The number of Americans applying for state unemployment benefits unexpectedly increased last week, indicating the pace of layoffs is still elevated, threatening to hamper the U.S. economy's recovery from the coronavirus pandemic.

The latest jobless claims figures from the Labor Department, which cover the week ending Oct. 10, show that 898,000 workers sought aid last week, about four-times the pre-crisis level. It was the highest number since Aug. 22, signaling the labor market's recovery is beginning to plateau just a few weeks before the November election.

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Economists surveyed by Refinitiv expected 825,000 new claims.

More than 64 million Americans -- roughly 40% of the nation's labor force -- have sought jobless aid since the coronavirus lockdowns began in mid-March.

The number of people who are continuing to receive unemployment benefits fell to a little more than 10 million, a decline of about 1.1 million from the previous week. The decline suggests that employers are calling their workers back.

Still, some of the declines in so-called continuing claims may represent workers who have used up the maximum number of payments available through state unemployment programs (typically about six months) and are now receiving benefits through a separate federal program that extends the aid by 13 weeks. Congress created the extra federal benefits earlier this year with the passage of the CARES Act.

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Roughly 1 million unemployed Americans have been seeking aid each week for the past six months, when the COVID-19 crisis triggered an unprecedented shutdown of the nation's economy, pointing to a sluggish turnaround. It's down from the peak of more than 6 million claims in late March, but remains well above the 200,000 reported in February. Before the pandemic, the record high was 695,000, set in 1982.

“The latest figures on new workers claiming unemployment insurance (UI) cast a dark cloud over the nation’s slow economic recovery," said Glassdoor chief economist Andrew Chamberlain. "The number of new claims last week is more than four times higher than the pace of workers filing for unemployment a year ago — a sign that COVID-19 continues to deal heavy blows to the nation’s labor market."

In recent weeks, several large employers have announced tens of thousands of job cuts. Disney laid off 28,000 workers, mostly at its two U.S. theme parks. Royal Dutch Shell said it planned to cut between 7,000 and 9,000 jobs by the end of 2022, and U.S. airlines cut 35,000 workers as federal coronavirus aid expired.

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The latest report comes amid a high-stakes impasse between the White House and Democratic leaders over another coronavirus relief package.

The deadlock has dragged on for months and has put at stake potentially trillions of dollars in aid for workers and businesses still reeling from the crisis, including extended unemployment benefits, a second direct payment and another round of funding for small businesses.

There are still roughly 10.7 million more out-of-work Americans than there were in February before the pandemic hit.