This is where economists and policymakers, not to mention, workers and their families, want to see United States jobless claims heading – down.
On Thursday, the US Bureau of Labor Statistics reported that 1.186 million people filed for state unemployment benefits in the week ending August 1, a decrease of 249,000 from the previous week.
The headline number comes on the heels of two consecutive weeks of rising claims, suggesting that layoffs across the nation are ebbing and the labour market may be on the mend again.
In another sign of strengthening, the number of workers collecting unemployment benefits from state programmes fell by 844,000 to 16.1 million. This so-called “continuing claims” data lags initial claims by a week.
Weekly jobless claims offer one of the most timely snapshots of a US labour market that is struggling to climb out of the deep hole dug by coronavirus lockdown measures that closed businesses and threw tens of millions of Americans out of work.
The labour market recovery showed signs of stalling in early July as COVID-19 infections spiked in parts of the country, prompting officials to either pause or rollback the easing of lockdown restrictions. That in turn laced even more uncertainty into the outlook for businesses who responded by lay-offing workers and putting new hiring on hold.
Thursday’s look at jobless claims will whet appetites for the big data the US Department of Labor is dropping on Friday – the July jobs report. Economists expect the economy added 1.6 million jobs last month, according to FactSet – which would mark a sharp deceleration from June, when employers added 4.8 million jobs.
In a possible precursor to what could prove to be sobering news on Friday, the ADP National Employment Report released on Wednesday showed US private payrolls increased by a mere 167,000 jobs in July.
The US jobs market still has a long, long way to go to recover its pre-pandemic strength.
To put it into perspective, the total number of people collecting jobless benefits from state and federal programmes as of July 18 registered at 32.118 million. Some analysts reckon the true number could be a few million lower, due to double-counting of applicants. Still, for the comparable week in 2019, only 1.7 million workers were collecting jobless benefits from all programmes.
The tens of millions of workers currently collecting unemployment also just suffered an enormous drop in income after the $600 federal top-up to weekly benefits expired at the end of last month.
Some economists believe the lapse of the federal top-up could have skewed the jobless claims numbers last week.
“We think there is some risk that the expiration of federal supplemental benefits discouraged some individuals for filing claims,” Nancy Vanden Houten, lead US economist at Oxford Economics wrote in a note to clients. “If that’s the case, initial claims would likely bounce back if and when those benefits are renewed.”
Republicans and Democrats in Congress are still hammering out a new virus relief package, and they are at loggerheads over the size and scope of the federal top-up.
Democrats want to extend the $600 federal weekly supplement through January, while Republicans want to slash the combined state and federal benefit to 70 percent of workers’ previous wages, with the federal top-up capped at $500 a week.