November 27, 2021

U.S. Jobless Claims Extend Decline to New Pandemic Low

Worker filings for jobless benefits fell again to a fresh pandemic low, extending a steady downward trend and adding to signs of a healing labor market and a broader, though uneven, economic recovery.

Initial unemployment claims for regular state programs, a proxy for layoffs, fell last week to 406,000 from 444,000 the prior week, the Labor Department said Thursday. That level represents the lowest levels of claims since the coronavirus pandemic’s onset last year and the fourth consecutive week claims have reached a new pandemic low. Economists surveyed by The Wall Street Journal had forecast there were 425,000 new claims last week.

A separate report from the Commerce Department showed orders for cars, appliances and other long-lasting, or “durable,” goods fell a seasonally adjusted 1.3% in April from March—the first monthly decline in demand for such products in a year. The decline was concentrated in the automotive sector, where a semiconductor shortage has caused disruptions, and the defense industry, which tends to be very volatile. Shipments of motor vehicles and parts fell sharply as well, while shipments of defense capital goods rose.

Low business and retail inventories have translated to increased demand for manufacturers for much of the past year, but supply-chain issues continue to constrain production and delay some shipments.

Excluding transportation, durables orders were up 1% in April and excluding defense, they were unchanged from March. Orders for nondefense capital goods excluding aircraft—also known as core capital goods, a proxy for business investment—increased 2.3% in April.

“In short, notwithstanding the headline figure, this report points to ongoing explosive expansion,”

Stephen Stanley,

chief economist at Amherst Pierpont Securities, said of the durable goods figures in a note to clients.

U.S. gross domestic product, a broad measure of the economy’s output of goods and services, rose in the first quarter at an annual rate of 6.4%, unrevised from the initial estimate, according to another Commerce Department report. Consumer spending, the economy’s key driver, was revised up to an annual rate of 11.3% in the first three months of the year.

Taken together, Thursday’s data point to a labor market that is gaining strength as Covid-19 cases steadily decrease, more Americans receive vaccines against the virus and governments ease restrictions on businesses, although the broader economic recovery remains uneven.

“I think there’s still a lot of pain out there, but the good news is that it really looks like the economy is kicking into overdrive, and I do see positive signs for the job market,” said

Beth Ann Bovino,

chief U.S. economist at S&P Global Ratings.

U.S. employment overall is down by more than eight million jobs compared with pre-pandemic levels. Meanwhile, initial jobless claims remain higher than before the pandemic. The number of Americans continuing to receive unemployment benefits through regular state programs fell to 3.6 million in the week ended May 15, after rising the previous week.

What Happens When You Lose Your Job?

As of early May, nearly 16 million Americans were continuing to claim benefits through all unemployment programs, including special programs designed to support workers through the pandemic. Some businesses and Republican lawmakers have recently expressed concern that a federal pandemic program that provides benefit recipients with a $300 weekly supplement may be constraining employers’ ability to hire workers.

Roughly two dozen states, all led by Republicans, have announced they will end the supplement this summer, ahead of its scheduled expiration in early September.

Research from the jobs site Indeed.com measured those states’ share of national job search activity, as reflected in clicks on job postings, after they announced the plans to end the supplement early. The research found job search activity in those states increased immediately after the announcements. However, the rise was fleeting, the research found, and within eight days returned to prior levels.

Surveys suggest the benefits are among several reasons many workers remain out of the job market, despite continued high unemployment. Other reasons include fears of contracting Covid-19, schools remaining closed or only partially reopened, and lack of skills needed for the available positions. The Labor Department reported employers added just 266,000 jobs last month, compared with the one million economists had expected.

Tim Bridges, owner of The Cleaning Authority in Troy, Mich., said demand for his company’s services has been picking up recently, but that he hasn’t been able to take on new customers quickly because of limited staff.

He said some workers who have turned down his job offers cited enhanced unemployment benefits. Mr. Bridges last year raised the company’s starting wage to $15 an hour, and he said he recently changed company policies to offer staff more flexible schedules in an attempt to attract additional workers. He said he has hired five new workers over roughly the past two months, bringing his total number of staff to 28, but is still looking for more.

“It’s a more competitive marketplace to find employees. We’re doing everything we can,” he said.

Mr. Stanley, of Amherst Pierpont Securities, said he expects the Labor Department to report next week that employers added 700,000 jobs in May. He said constraints on the supply of labor should ease as enhanced unemployment benefits end, more people become vaccinated and schools reopen, potentially reducing some Americans’ lingering health and child-care concerns.

“I think more and more people will get out there and search for jobs and that should help both alleviate stress in the job market and accelerate the pace of reported job gains,” he said.

Supply-chain disruptions are likely also limiting companies’ ability to hire, said

Robert Frick,

corporate economist at Navy Federal Credit Union. He said employers must also adjust to a hiring landscape that is fundamentally altered because many workers’ preferences and habits have changed over the course of the pandemic.

“When something crashes in the economy, it’s going to be built back differently. Right now, we’re in the process of figuring out what’s the same and what’s different,” Mr. Frick said. “People are figuring out, ‘Is my job gone for good?’ and may also be thinking, ‘Do I want to go back to my job?’ ”

Write to Amara Omeokwe at amara.omeokwe@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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