The number of unemployment claims fell to a new pandemic low at 473,000 for the week ending May 8. This is the lowest number for initial claims since March 14, 2020 when it was 256,000, according to the Labor Department.
The previous week’s level was revised up by 9,000 from 498,000 to 507,000.
While the numbers are encouraging, to put these latest figures in context, pre-pandemic, first-time unemployment benefit filers had typically numbered only about 225,000 weekly. For example, for the week ending Feb. 29, 2020, the figure stood at 217,000 claims, according to Labor Department data. However, for the week ending May 9, 2020 claims stood at 2,315,000.
These new figures might assuage fears about the labor market and the broader economy, as the U.S. only added 266,000 jobs in April, a major disappointment, especially following March’s addition of 916,000 jobs.
The figure was well below expectations, as economists surveyed by Dow Jones Newswire and The Wall Street Journal were expecting one million new nonfarm payroll jobs — which excludes farm workers — to be created last month, according to Barron’s.
Both the unemployment rate, at 6.1%, and the number of unemployed persons, at 9.8 million, were little changed in April, according to the Labor Department.
“These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the coronavirus pandemic, 3.5% and 5.7 million, respectively, in February 2020,” the department said in a release last week.
In televised remarks Monday afternoon, Biden attempted to ease fears that economic recovery had come to a halt, saying, “I never said, and no serious analyst ever suggested, that climbing out of the deep, deep hole our economy was in would be simple, easy, immediate or perfectly steady. Remember, 22 million Americans lost their jobs in this pandemic. So, some months will exceed expectations; others will fall short. The question is, ‘What is the trendline? Are we headed in the right direction? Are we taking the right steps to keep it going?’ And the answer, clearly, is yes,” Biden said.
“Because of the American Rescue Plan, forecasters are projecting we’ll see the fastest economic growth in 40 years in the months to come. We’re moving in the right direction,” he added.
Republicans have been critical of the $300 weekly payments the unemployed receive on top of their state benefits, arguing it’s keeping workers from re-entering the labor market. In addition, many employers say they can’t find enough workers to meet surging demand, in turn limiting production.
According to The Wall Street Journal, those constraints could ease in September as the supplemental jobless benefits end and more schools reopen. James Knightley, ING’s chief international economist tells the WSJ that he expects companies will increase pay to attract more workers in the interim.
In addition, the WSJ says that the rate at which workers quit their jobs — a proxy for confidence in the labor market — held steady at 2.4% in March, matching a record high for data tracing back to 2000. “That signifies that it’s like, ‘See you later, I’m going to go get the next-best-paid job,'” Knightley told the WSJ.
“That sort of movement normally translates into companies thinking, ‘Actually, I need to retain staff. I’ve got to start paying more,'” he added.
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