For the first time since the beginning of the Covid 19 pandemic, initial jobless claims fell below 400,000, the Ministry of Labor announced on Thursday.
Initial jobless claims were 385,000 for the week ended May 29, down from 405,000 the previous week and below the Dow Jones estimate of 393,000.
The last time claims were lower was the week of March 14, 2020 when it was 256,000. The number jumped to nearly 3 million the following week and hit more than 6.1 million in early April when U.S. governments shut down stores to slow the spread of the coronavirus.
With the spread of vaccinations and the reopening of companies, the job market picture has improved considerably. An ADP report on Thursday showed private wage growth rose 978,000 in May.
Despite the decline in weekly claims, permanent claims rose by 169,000 to 3.77 million. This data is a week behind the headline claims numbers.
The unemployment claims data come the day before the closely watched report on payrolls outside of the Department of Labor’s agriculture. Estimates put 671,000 new jobs, up from a disappointing 266,000 in April when it was expected to be 1 million.
Although employment data continues to improve, there are large gaps in the labor market, especially among those at the lower end of the economic spectrum.
More than 15.4 million Americans are still receiving benefits under the various programs, including two specifically designed to combat pandemic-related displacement. This sum, which was two weeks ago, is about half of the previous year.
The number of claims is expected to continue to decline as more workers return to their jobs and states cut benefits. The federal government’s extended unemployment programs expire in September, and some blame them for the reluctance of some workers to take on new jobs.
A regular survey the Federal Reserve conducts in its districts, released Wednesday, showed that companies across the country are struggling to find workers to fill positions.
“The lack of applicants has prevented some companies from increasing their production and, less often, has caused some companies to reduce their uptime,” the Beige Book report reads. The report also found that companies are offering signing premiums and higher wages to attract workers, but the labor supply is expected to remain “constrained”.
In the greater Boston area, entrepreneurs cited “generous unemployment benefits, childcare responsibilities, and safety concerns” as problems preventing them from finding work.
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