A year after they shot up for the first time, unemployment claims could finally return to earth.
More than 714,000 people applied for state unemployment benefits last week, the Ministry of Labor said on Thursday. That was a little more than the week before, but still below the lowest weekly totals since the pandemic began.
In addition, 237,000 people applied for Pandemic Unemployment Assistance, a federal program that covers people who are not eligible for government benefit programs. That number has also decreased.
Unemployment claims are still high in historical comparison and are well above the norm before the pandemic, when around 200,000 people applied for benefits every week. Applications have only improved gradually – even after the recent declines, the weekly number is slightly lower than last autumn. In total, some 18 million people receive unemployment benefits, many through programs that extend benefits beyond the 26 weeks offered in most states.
However, economists are optimistic that further improvements are imminent as vaccine rollouts accelerate and more states lift restrictions on doing business. Fewer companies are laying off workers and hiring has increased, meaning people who lose their jobs are more likely to find new ones quickly.
“We were finally able to see that the number of unemployment claims was falling because enough jobs were created to make up for the layoffs,” said Julia Pollak, labor economist at the ZipRecruiter construction site.
There are other signs that the economic recovery is picking up momentum. The Institute of Supply Management announced Thursday that its production index, a closely watched measure of the industrial economy, hit its highest level since 1983 in March. The report’s employment index also rose sharply, a sign that manufacturers are likely to be more hiring to meet rising demand.
Economists will get a more complete, if less timely, picture of the labor market on Friday when the Department of Labor releases data on recruitment and unemployment in March. Forecasters polled by FactSet expect the report to show US employers created more than 600,000 jobs in the last month, most since October.
Even better numbers are probably ahead of us. The March data was collected earlier this month, before most states expanded access to vaccines and before most Americans received $ 1,400 checks from the federal government under the newly passed relief package. Those forces should translate into even faster job growth in April, said Jay Bryson, Wells Fargo’s chief economist.
“If you can’t get a barn burner in March, you will likely get one in April,” he said.
Like last year, the biggest risk to the economy is the coronavirus itself. Virus cases are picking up again in large parts of the country as states have begun to relax restrictions. If that uptrend turns into a full blown new wave of infections, it could force some states to reverse course, which could slow the recovery, Bryson warned.
But few economists expect a repeat of last winter, when a jump in Covid-19 cases reversed the recovery. More than a quarter of adults in the United States have received at least one dose of a coronavirus vaccine, and more than two million people are vaccinated every day. This should allow economic activity to continue to recover.
Nevertheless, Ms. Pollak warned that the labor market would not return to normal overnight. Even as many companies resume normal operations, others are finding that the pandemic has permanently disrupted their business model.
“There are still a lot of business closings and layoffs pending,” she said. “The effects of this pandemic are still affecting this economy.”