The numbers: Applications for U.S. unemployment benefits fell last week to a fresh pandemic low, reflecting more aggressive efforts by companies to hire new workers amid a rapid economic recovery.
Initial jobless claims in the states dropped by 34,000 to 473,000 in the seven days ended May 8, the government said Thursday. It was the fifth decline in a row.
Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims to total a seasonally adjusted 500,000.
Businesses are trying to hire more people as the economy moves toward a full opening and consumers itch to satisfy cravings for many purchases they put off during the pandemic. Massive federal spending has put more cash in people’s pockets and dwindling coronavirus cases have given them the confidence to spend it.
Yet despite record job openings, the economy only created a paltry 266,000 new jobs in April. Wall Street had a forecast a much larger increase of 1 million.
Many firms complain they can’t find qualified workers and some blame generous government unemployment benefits for dissuading people from accepting a job. Another problem is lack of daycare options for parents in areas where schools are still closed.
Unemployment claims are still more than twice as high now compared to the last month before the pandemic. The number of applications had been running in the low 200,000s before the viral outbreak early last year.
What happened: New applications for jobless benefits fell the most in Michigan, New York, Florida and Vermont. Michigan suffered another wave of coronavirus cases earlier this year but has turned the corner.
The only states to post a notable increase in new claims were Georgia and Washington.
An additional 103,571 applications for jobless benefits were also filed through a federal pandemic-relief program.
Adding up new state and federal claims, the government received 591,007 applications last week for unemployment benefits, based on actual or unadjusted figures. That’s a new low since the pandemic began in March last year.
The number of people already collecting state jobless benefits, meanwhile, fell by 45,000 to a seasonally adjusted 3.65 million.
Some 5.27 million who have exhausted state compensation were also getting benefits through an emergency program funded by the federal government.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs rose totaled 16.86 million as of April 24. These claims had topped 30 million early in the crisis.
Fewer than 2 million people were getting benefits before the pandemic erupted.
Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting. Widespread fraud has also resulted in tens of billions of dollars in improper payments, a Labor Department review estimated.
Big picture: No one predicted a potential labor shortage once the pandemic faded and the economy regained some sense of normalcy, but that’s the situation the U.S. could find itself in. Some employers, such as Amazon
are raising wages to attract new hires.
Layoffs are falling and should continue to decline over the summer, but how quickly people move from unemployment back into the workforce is less clear. Labor shortages could linger until the fall, when schools are expected to be open and emergency unemployment benefits expire.
A full U.S. economic recovery might take longer if companies can’t find enough workers. Some have already had to scale back production because they lack the manpower.
What they are saying? “The number of new job losses is steadily returning to pre-pandemic levels. That said, there is still a long way to go,” said Cailin Birch, global economist at The Economist Intelligence Unit. “The number of unemployment claims was the lowest level yet since March 2020, but it is still around twice the number of new claims … in the weeks prior to the onset of the crisis.”
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose in early Thursday trades. Stocks fell sharply on Wednesday after the rate of inflation rose to the highest level in 13 years.