Jobless claims fell again to the lowest level since the pandemic took hold more than a year ago, another sign the labor market is rebounding this spring.
Initial unemployment claims, a proxy for layoffs, fell by 13,000 last week to a seasonally adjusted 553,000, the Labor Department said on Thursday. The previous week’s figure was revised up to 566,000. The latest reading marked the third straight week jobless claims were below 600,000, their lowest levels since early 2020. The four-week moving average, which smooths out volatility in the weekly figures, was 611,750, also a pandemic low.
New claims this month are well below the millions of claims filed weekly a year ago, but still more than double the roughly 200,000 weekly applications submitted in the months before the pandemic began.
Fewer workers being laid off comes as hiring is picking up, with states lifting restrictions on gatherings at restaurants, baseball stadiums and tourist venues, and Americans, who are increasingly vaccinated against Covid-19, becoming more willing to spend time and money outside their homes. Consumer spending is the primary driver of the U.S. economy.
“The labor market looks to be moving in the right direction,” said AnnElizabeth Konkel, economist at job search site Indeed.com, noting claims are falling and job openings are rising. “We certainly need further improvement, but with the number of fully vaccinated individuals increasing, the coming months look promising.”
U.S. employers added 916,000 jobs in March, and economists surveyed by The Wall Street Journal project robust hiring—better than 500,000 a month—to continue for the next year. While that pace of hiring is more than double the rate in 2019, it would still leave the economy short of replacing all of the jobs lost during the pandemic in the next 12 months. As of March, there were 8.4 million fewer jobs on payrolls compared with February 2020, according to the Labor Department.
There are other signs of a tightening labor market. Some employers are reporting challenges finding available workers and larger employers are raising wages.
Amazon.com Inc. said Wednesday that more than 500,000 of its employees would see pay increases of between 50 cents and $3 an hour. Walmart Inc. and Costco Wholesale Corp. announced broad pay raises earlier this year.
The decrease in benefit applications indicates that more employers are holding on to workers and those who are jobless are increasingly finding opportunities.
“We’re no longer adding to the hole, which is a good sign for the recovery,” said Nela Richardson, chief economist at human-resources software firm Automatic Data Processing Inc.
The number of new claims peaked above six million last spring. It then fell sharply and plateaued between 700,000 and 900,000 for most of the fall and winter. Dr. Richardson, a Ph.D. labor economist, said a concerning sign then was seeing some who lost jobs early in the pandemic applying again after a short return to employment. The renewed downward trend in claims suggests a more sustained healing is under way, she said.
While the level of new applications is falling, the number of Americans receiving unemployment benefits remains elevated. About 16.6 million workers were receiving benefits on the week ended April 10 through one of several programs, including regular state aid and federal emergency programs put in place in response to the pandemic. While that figure, which isn’t adjusted for seasonality, was down from the prior week, it was well above the near two million before the pandemic began.
A coronavirus relief package enacted in March expanded eligibility for extended unemployment benefits until September and continued a $300-a-week enhancement to the amount authorized by states.
Unemployment benefits typically expire after six months or less, depending on state policies. Federal extensions will allow some to receive payments for about 18 months.
Some economists say the extended and enhanced benefits have provided a disincentive for workers to return to work, particularly positions that pay lower wages. Others say the payments have provided income support to those who can’t return to work because of child-care responsibilities or don’t have the skills for jobs in growing sectors such as logistics or construction.
Write to Eric Morath at [email protected]
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