New unemployment claims fell last week, the government reported Thursday, the latest sign that the labor market recovery, slow and unstable as it may be, is continuing.
“The numbers look encouraging at first glance,” said Gregory Daco, chief US economist at Oxford Economics.
However, he and other analysts cautioned against reading too much about a week’s changes. The combined average of new state and federal unemployment insurance claims for the first eight weeks of this year is actually slightly higher than it was for the last eight weeks of 2020.
If you take a step back and look at the bigger picture, Mr Daco said, “It reflects an environment where the job market remains quite fragile.”
A total of 710,000 workers filed applications for state benefits for the first time in the week ending February 20, down from 132,000, the Ministry of Labor said. In addition, 451,000 new claims were submitted for Pandemic Unemployment Assistance, a federal program for freelancers, part-time workers, and others who are not routinely eligible for government benefits. This corresponds to a decrease of 61,000.
None of the figures are seasonally adjusted. Seasonally adjusted, the new government claims amounted to 730,000, a decrease of 111,000.
Unadjusted, last week’s total was the lowest number of new government claims since the pandemic began; seasonally adjusted, it was the lowest since November. The figures can be changed as the Department of Labor receives more data.
Although initial unemployment claims are nowhere near as high as last spring, they are still extraordinarily high by historical standards. At this point in time there are around 10 million fewer jobs than in the previous year.
The number of coronavirus cases has fallen as attempts have been made to provide vaccines to those most at risk. But until employers and consumers feel that the pandemic is under control, the labor market will not fully recover, according to economists.
“I can’t see jobless claims changing much for a while,” said Allison Schrager, an economist at the Manhattan Institute.
Apr. 27, 2021, 11:01 p.m. ET
Much of the decline in state benefit claims over the past week is due to sharp declines in two states, California and Ohio, which previously had increased levels of fraud.
There has also been an increase in the number of people applying for extended benefits under the pandemic emergency unemployment compensation program, which covers workers who have exhausted their regular insurance.
There are delays in reporting these numbers, but declines in one program might reflect movement to another program rather than a return to the workforce, said Heidi Shierholz, a senior economist and director of politics at the left-wing economics Policy Institute.
For people who rely on expanded state unemployment insurance to pay their bills, the surge in entitlements is a sign that the program is working as intended: after a brief delay in approving additional benefits in December, workers can opt in or out re-enroll in the program.
However, this last round of unemployment benefits expires in mid-March. The $ 1.9 trillion aid package proposed by President Biden provides for a six-month extension of the additional unemployment benefit.
Federal Reserve and Treasury leaders have said the damage to the labor market is much deeper than published government figures suggest. They estimate that the actual unemployment rate is closer to 10 percent than the 6.3 percent recorded in the Department of Labor’s most cited measure.
Jerome H. Powell, chairman of the Federal Reserve, testified in front of Congress this week: “The economic recovery remains mixed and far from complete, and the path ahead is highly uncertain.”
“Although great strides have been made in the job market since the spring, millions of Americans remain unemployed,” he added.
The service industries are hardest hit, particularly in the restaurants, hospitality, leisure and travel sectors. On the career side, in fact, overall job postings are 5 percent higher than a year ago, with the demand for warehouse and construction workers and drivers being greatest, said AnnElizabeth Konkel, an economist at the company.
“We need job postings to stay above the prepandemic baseline and get people back into the job market,” she said.