Jobless claims: Initial filings fell for a fourth straight week to set new pandemic-era low
Initial unemployment claims fell for a fourth straight week to set a new 14-month low as the labor market recovery made further strides toward recovering jobs lost during the pandemic.
The Department of Labor released its weekly report on new jobless claims Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:
Initial jobless claims, week ended May 22: 406,000 vs. 425,000 expected and 444,000 during the prior week
Continuing claims, week ended May 15: 3.642 million vs. 3.680 million expected and a revised 3.738 million during the prior week
As a greater percentage of the U.S. population becomes inoculated against COVID-19, more businesses have reopened and more social distancing standards have been eased. According to data from the Centers for Disease Control and Prevention, half of all Americans have now received at least one dose of a COVID-19 vaccine.
This has in turn slowed the pace of layoffs and other separations, allowed more individuals to return to the workforce and pushed new weekly jobless claims closer toward their pre-pandemic pace of just over 200,000 per week.
“That 400,000 level on new jobless claims — where we roughly are right now — is often seen as an important psychological level,” Mark Hamrick, senior economic analyst at Bankrate, told Yahoo Finance on Thursday. "If we can break below that and break decisively below it, I think that’ll be important."
Still, however, an elevated number of Americans are still claiming unemployment benefits, even as the pace of new filings slows. More than 15.8 million individuals were claiming benefits of some form as of the week ended May 8. This included more than 11.5 million individuals on federal crisis-era unemployment benefits including Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, which were started in the past year to alleviate some of the strain due to COVID-related job losses.
But with COVID-19 infection rates falling to a near one-year low and more businesses reopening and struggling to find workers, a number of states are now rolling back some of these crisis-era benefits. Nearly two dozen states are slashing the federal $300 per week in unemployment benefits as soon as in mid-June, while the federal expiration date for these benefits is set for Sept. 6.
Some have viewed these enhanced benefits as incentive for workers to stay on the sidelines, exacerbating labor shortages many in the service sector especially have been witnessing. Others, however, have said the benefits provide a necessary economic cushion for workers that have been disproportionately impacted by fallout from the pandemic.
"No one knows for sure why people have been reluctant to return to the labor market — we're assuming it is due to a combination of COVID fear, childcare difficulties, and the $300 per week federally-funded enhancement to unemployment benefits — but the numbers are huge," Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note earlier this week. "The labor force in April was some 5M smaller than we would have expected if the pandemic hadn't happened."
State-by-state unemployment
The headline drop in weekly unemployment claims was broad-based last week, with most states logging declines in initial filings. Washington state saw new claims fall by more than 8,000 on an unadjusted basis, and Florida and New Jersey each saw new filings fall by more than 5,600.
But while the unemployment picture improved on a national basis, some states still struggled with persistently elevated levels of joblessness. Nevada led the nation with the highest insured unemployment rate for the week ended May 8 at 5.7%, followed by Connecticut with a rate of 4.5%, and Rhode Island with a rate of 4.5%.
The insured unemployment rate measures the ratio of people currently claiming benefits to the entire state population. Nationally, the insured unemployment rate was 2.7% for the week ended May 8.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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