The number of Americans newly seeking jobless benefits fell last week for the first time in about a month as the labor market continued its recovery amid declining COVID-19 cases, the feds said Thursday.
Initial filings for unemployment benefits, seen as a proxy for layoffs, fell to 326,000 last week, down 38,000 from the prior week’s level of 364,000, according to data released Thursday by the Labor Department.
Thursday’s drop in new jobless claims snapped a three-week streak of surprise increases in the number of Americans applying for unemployment.
Economists surveyed by Dow Jones expected new claims to fall to 345,000 after seeing a rise of 11,000 last week, largely driven by California as the state moved people off federal benefits onto a state program to extend their claims for a week.
“After three straight weekly increases, new jobless claims have finally moved to the downside,” said Mark Hamrick, Bankrate’s senior economic analyst.
Weekly new claims have fallen substantially from the 2020 peak of about 6.1 million new claims in a single week, but remain above the 200,000 new claims per week seen before the pandemic.
More than 2.7 million Americans remained on traditional state unemployment benefits as of Thursday, the feds added.
Continuing claims fell by 97,000 from the prior week’s revised level, according to the new data. That figure stood at nearly 13 million at the same time last year, in the thick of the pandemic.
Chris Giamo, head of commercial banking at TD Bank, noted that the recovery of the labor market hit an obstacle over the past few weeks in the fallout from Hurricane Ida, which is now subsiding as hiring picks back up in affected regions.
“Despite jobless claims continuously climbing against forecasts for the last three weeks, this week’s indicators are a welcome surprise and a sign that the effects of Hurricane Ida have scaled back, and that employers are starting to increase their hiring efforts,” he said.
“As we continue to combat the delta variant, we are seeing a much-needed sign of recovery especially after the numbers had been continuously, and unexpectedly, climbing.”
This week’s jobless report comes ahead of Friday’s highly anticipated September non-farm payroll report, which is expected to show 500,000 new jobs created for the month, a major jump on the meager 235,000 jobs added in August.
The unemployment rate is also expected to have fallen to 5 percent last month from 5.2 percent in August, according to economists surveyed by Dow Jones.
The economic recovery has made strides in recent months, but inflation and a nationwide labor shortage have held back further progress, economists say.
“The expected path forward for the job market and the broader economy is considered to be fairly upbeat. Still, a higher-than-normal degree of uncertainty remains,” Bankrate’s Hamrick said.
“Some time ago, it was thought that the reopening of the economy might have been roaring by now. But supply chain challenges and the Delta variant provided new plot twists which slowed the recovery.”
For households earning the US median annual income of about $70,000, the current inflation rate has forced them to spend another $175 a month on food, fuel and housing, according to Mark Zandi, chief economist at Moody’s Analytics.
Next week, the Bureau of Labor Statistics’ September consumer price index report will shed more light on the inflation situation and show whether the specific goods that are seeing major price spikes are beginning to ease.
But consumer experts have said the rattled global supply chain and shortages of various commodities and workers in nearly all industries make it hard to predict when prices might come back down.