Unemployment claims fall further in US as economy reopens
Number of new claims for state unemployment benefits remains below 700,000 for consecutive weeks for the first time since March last year
Fewer Americans filed new claims for unemployment benefits last week, suggesting layoffs were subsiding and strengthening expectations for another month of blockbuster job growth in April as a re-opening economy unleashes pent-up demand.
Initial claims for state unemployment benefits totaled a seasonally adjusted 547,000 for the week ended April 17 compared to 586,000 in the prior week. Economists polled by Reuters had forecast 617,000 applications in the latest week.
It was the second straight week that claims were below the 700,000 level since March 2020 when mandatory shutdowns of non-essential businesses like restaurants and bars were enforced to slow the first wave of Covid-19 infections.
Claims have remained high because of fraud, especially in California and Ohio. The enhancement of the unemployment benefits programs, including a weekly $300 subsidy, could also be encouraging some people to attempt to file a claim for assistance, though not every application is approved.
The latest Labour Department data on first payments shows only a fraction of claims were successful in recent months.
The unprecedented surge in claims early in the pandemic could also be messing with the model that the government uses to strip seasonal fluctuations from the data. Claims jumped to a record 6.149 million in early April 2020. In a healthy labour market, claims are normally in a 200,000 to 250,000 range.
The United States has expanded vaccination eligibility to most American adults and more than half of that population has had at least one vaccine dose, according to the US Centres for Disease Control and Prevention. A third of US adults are fully vaccinated, as well as 26 per cent of the population overall, it said.
That, together with the White House's $1.9 trillion pandemic rescue package, has allowed for broader economic re-engagement. The resulting surge in demand has left businesses scrambling for workers. Retail sales raced to a record high in March and factories are humming.
Last week's claims data covered the period during which the government surveyed business establishments for the non-farm payrolls component of April's employment report. First-time filings have dropped from 765,000 in mid-March.
Claims are generally considered a leading labour market indicator, but have lagged employment during the pandemic.
While the recent downward trend supports expectations for robust job gains in April, economists are keeping an eye on the number of people receiving benefits under both the regular state unemployment insurance and government-funded programmes to get a better read of the labour market's health.
"The total number of individuals receiving benefits on all programs also seems to be trending lower as hiring has picked up, although this number could also fall as more individuals reach the end of their allotted period of benefits," said Andrew Hollenhorst, an economist at Citigroup in New York.
"Still, we expect more strong monthly employment reports over the coming months."
The economy created 916,000 jobs in March, the most in seven months. Still, employment remains 8.4 million jobs below its peak in February 2020.
Published: April 22, 2021 08:28 PM