US jobless claims, proxy for layoffs, at fresh pandemic low

The United States labour market delivered a welcome surprise on Thursday.

The number of Americans filing claims for state unemployment benefits fell by 51,000 last week to a fresh pandemic low of 364,000, the US Department of Labor said.

The number was better than many economists were expecting and signals that the US jobs market is continuing to heal as coronavirus vaccination rates climb, business-sapping COVID-19 restrictions roll back, and American consumers – whose spending drives some two-thirds of US economic growth – come out of hibernation.

The total number of Americans currently receiving unemployment benefits from states – a metric known as continuing claims – increased by 56,000 for the week ending June 19 to 3.46 million.

Initial jobless claims – a proxy for layoffs -are still above their pre-pandemic average of roughly 220,000, but they have been trending more or less downward all year, only posting two weekly rises since the beginning of April.

“When President Biden took office [in January], over 800,000 new unemployment claims were being filed every week on average – and now that number has been more than cut in half,” the White House said in a press statement on Thursday.

“This is just the latest sign that the President’s plans are rebuilding the economy.”

Against this backdrop of labour market improvement, though, support for the nation’s jobless has become a hotly debated topic as businesses across the country scramble to hire enough workers to reopen and ramp up operations.

In April, there were some 9.3 million job openings – a record high. Yet in May, there were 9.3 million people unemployed in the US.

Some believe federal unemployment benefit programmes that include a $300 weekly top-up to state benefits are disincentivising the jobless to find work.

Over two dozen states have announced they are withdrawing from federal programmes early – and some have started –  citing businesses that are struggling to hire enough workers to meet resurgent demand.

But economists point to other factors that could be keeping jobless workers on the sidelines – such as a continuing lack of available childcare options, people taking early retirement, hiring bottlenecks for certain kinds of labour as businesses reopen en masse, and fear of contracting COVID-19.

All eyes now turn to Friday when the Labor Department releases its comprehensive monthly employment report for June.