New claims for unemployment benefits in the US fell to 684,000 last week, the lowest number since the start of the coronavirus crisis, as the labour market’s recovery from the pandemic gathered pace.
The number of initial jobless claims filed for regular state programmes decreased by 97,000 in the week ending March 20, the US labour department said on Thursday.
That was better than economists’ expectations of a drop to 730,000 new claims and the lowest level reported in a year. It also marked the first time since the start of the coronavirus crisis in the US that claims fell below a pre-pandemic peak of 695,000.
Despite some noise in the weekly claims reports, “there are clear signals of a healing labour market,” said Nancy Vanden Houten, economist at Oxford Economics.
US stocks were mixed after the report. The S&P 500 down 0.1 per cent while the Nasdaq Composite was 0.1 per cent higher. Meanwhile, the yield on the US 10-year Treasury slid 0.01 percentage points to 1.6015 per cent.
Declining infections and hospitalisation rates, along with a rapidly expanding rollout of coronavirus vaccines — President Joe Biden has pledged enough doses for all adults by May — have prompted some US states to further loosen their lockdown curbs, while others have removed all limits on businesses.
Thursday’s report showed Illinois and Ohio were among the states reporting the biggest decreases in applications — declining by 56,347 and 46,445 respectively — while Virginia and Massachusetts reported the largest increases in claims applications.
The report also showed a decline of 42,509 in claims for federal pandemic unemployment assistance — which provides benefits for gig workers and the self-employed — to 241,745.
A separate report on Thursday showed US gross domestic product grew 4.3 per cent on an annualised basis at the end of last year — a 1.1 per cent increase compared with the previous quarter, and slightly higher than initial estimates.
More than 130m vaccine doses have been administered so far in the US. Congress has also passed Biden’s $1.9tn stimulus plan, which includes cheques to households, to help the economic recovery. As a result, the Federal Reserve has sharply upgraded its US growth forecast for the year to 6.5 per cent — the quickest expansion since 1984 and sharply higher than the 4.2 per cent growth that had been previously pencilled in.
The Fed, which signalled it would leave rates close to zero until at least 2024, also projected the unemployment rate would fall to 4.5 per cent by the end of 2021, compared with its previous outlook from December of 5 per cent.
Despite optimism about the US recovery, the labour market still has a long road ahead. Almost 19m Americans continue to seek jobless benefits more than a year after Covid-19 began spreading widely, and the world’s largest economy is 9.5m jobs short of its pre-pandemic level.
“While the ranks of beneficiaries remain staggeringly high at 19m, the unemployment benefits flowing to these individuals is just another example of the significant income support to households this cycle that has kept consumer spending relatively buoyant,” said Sarah House, economist at Wells Fargo.