First-time claims for unemployment insurance fell to a pandemic-era low last week, indicating that the labor market is improving as the fall approaches, despite concerns about the delta Covid variant.
The Labor Department reported Thursday that claims totaled 348,000 for the week ending Aug. 14. This was less than the Dow Jones forecast of 365,000 and a 29,000 decrease from the previous week.
The last time claims were this low was March 14, 2020, just before the Covid-19 pandemic declaration, which sent the United States jobs into its deepest but briefest recession on record.
Over the next few weeks, more than 22 million Americans would be sent to the unemployment line, raising the unemployment rate to 14.8 percent. Since then, the labor market has been steadily improving, but it is still far from pre-pandemic levels.
Stocks were volatile in the aftermath of the news, with the Dow Jones Industrial Average remaining well off its morning lows and falling only slightly in early trading.
Continuing claims also fell, falling to 2.82 million, a 79,000 decrease from the previous week. This data is a week behind the headline claims jobs and represents a new low since the pandemic began.
The total number of people receiving benefits from all programs fell to 11.74 million, a decrease of 311,787 for the week ended July 31, owing primarily to a significant drop in those receiving enhanced benefits, which will end in September. The total under all programs was 28.7 million a year ago.
According to unadjusted data, Texas accounted for a sizable portion of the decline in claims, which fell by 8,311. Illinois fell by 3,577 points, and Michigan fell by 2,188 points.
Overall, the drop may be good news for the labor market, which has seen nonfarm payrolls rise by 2.5 million in the last three months, and the unemployment rate falls to 5.4 percent from 6.3 percent at the start of the year. The Labor Department uses Thursday’s data as its survey week for the monthly nonfarm payrolls count.
However, there is still a significant employment gap, with approximately 6 million fewer Americans considered employed now than before the pandemic. In July, 8.7 million people were looking for work, far less than the 10 million or so job openings in the United States.
Economists attribute the inability to return to full employment to a variety of factors. There are ongoing pandemic fears, workers pushing for higher wages, and increased government jobs benefits that have reduced the incentives to take jobs.
Wages have been rising in response to the current economic climate, with average hourly earnings up 4% year on year in July. That would have been a record in data dating back to March 2007, before the pandemic.
According to a separate report released on Thursday, the pace of manufacturing growth in the Philadelphia region slowed in August. The Philadelphia Fed’s manufacturing index fell to 19.4 from 21.9 the previous month. The reading represents the percentage difference between firms that are expanding and those that are contracting. The level was lower than the Dow Jones forecast of 22.