U.S. unemployment claims fell below one million last week
for the first time since the coronavirus pandemic struck in March, suggesting
the deeply wounded labor market is regaining some footing.
New applications for unemployment benefits dropped to a
seasonally adjusted 963,000 in the week ended Aug. 8, the Labor Department said
Thursday, marking the second weekly reduction in filings. The number of people
collecting unemployment benefits through regular state programs, which cover
the majority of workers, also decreased to about 15.5 million at the beginning
of August.
But both figures remain well above prepandemic peaks, with
the number of people receiving benefits more than double the 6.6 million
reached in 2009.
Unemployment remains elevated as other measures of the
economy, including consumer spending, also lag behind levels from before the
coronavirus hit. An increase in coronavirus infections across much of the
country continues to threaten economic gains as states put in place new
restrictions aimed at containing the pandemic.
Still, the decline in jobless claims indicates layoffs are
easing and hiring is picking up, said Julia Pollak, economist at job site
ZipRecruiter.
“There may now just finally be enough activity to make
businesses feel confident enough to try to open their doors, even though
they’re running at a low capacity in most cases,” she said.
The drop in claims could also reflect waning fiscal support
by the government, Ms. Pollak said. The expiration of the extra $600 a week in
benefits puts much less money in unemployed individuals’ pockets, possibly
discouraging them from seeking benefits.
Without the $600 weekly boost, payments dropped to the level
set by states, which averaged about $330 a week for the 12 months through June,
according to the Labor Department.
Gus Faucher, economist at PNC Financial Services Group, said
the income boost helped prop up outlays for many households. Without it, some
consumers will likely cut back on their spending this month.
“That is going to be a drag on the recovery,” he said.
The Commerce Department releases fresh figures on retail
sales Friday, and economists estimate sales rose at a slower pace in July than
in the spring. Newer data suggest retail spending weakened this month, likely a
result of the expiring unemployment aid.
President Trump signed an executive action Saturday that
authorized states to extend a federally funded $300 in benefits and provide an
extra $100 in state-funded benefits. States likely won’t start implementing the
supplemental benefits for weeks, as they must apply for the federal funds and
set up new programs.
Actual claims figures—numbers not adjusted for seasonal
factors—dropped as well, falling by 156,453 to 831,856. Economists have been
watching for distortions in the seasonally adjusted figures, given the scope of
shifts in economic data caused by the pandemic.
Some workers who don’t qualify for benefits under regular
state programs—such as the self-employed, gig workers and parents who can’t
find child care—can collect benefits under a federal stimulus bill passed in
March. About 10.7 million individuals were collecting benefits through this
program at the end of July, a decline from the previous week’s 13 million.
Economists are watching claims figures to see if they tick
back up due to the extension of expanded unemployment aid. Many people who have
returned to the workforce are also finding that new jobs can be short-lived as
the U.S. struggles to contain the virus.
A Cornell University survey that showed about 31% of workers
who were placed back on payrolls after an initial layoff were laid off a second
time.
Fort Lauderdale, Fla., resident Zack Matthews has lost his
job multiple times in recent months. Mr. Matthews was laid off from his
creative director position at a telecommunications company in March. When his
unemployment benefits didn’t come through, Mr. Matthews picked up a job as an
overnight manager at a bar and grill in late June, but was laid off two weeks
later.
Mr. Matthews started a new job at the end of July as a
production manager at a photo and video studio. His unemployment benefits
arrived in two lump-sum payments at the beginning of August, four months after
he had first applied for them.
“It’s been quite a year,” Mr. Matthews said.
Other indicators also suggest the battered labor market is
healing and likely past the worst of the crisis. Employers added 1.8 million
jobs in July, the third consecutive month of hiring gains. The jobless rate
fell last month to 10.2% after peaking near 15% in April.
ZipRecruiter measures of job searching are modestly trending
up but remain below prepandemic levels.
Four-fifths of the increase in unemployment between February
and May was likely temporary, the Trump administration estimated Thursday in a
report. The Council of Economic Advisors report also said coronavirus relief
spending has significantly reduced the economic pain caused by the pandemic.
Tara McCracken, Goodwill Industries International Inc.’s
director of workforce development in Northwest North Carolina, said the agency
has seen greater demand for its job-search programs within the past two months.
“They want to get to work,” Ms. McCracken said, noting job
openings in the leisure-and-hospitality industry—the lifeblood of Asheville,
N.C.’s economy—have been scarce, but appeared to tick up last week.
—Kim Mackrael contributed to this article.
Click
here for the original article.