New applications for US jobless aid last week dropped to a level not seen since late last year, the government reported on Thursday, as the millions of unemployed workers await the impact of the President Joe Biden’s recently enacted stimulus package.
There were 712,000 seasonally adjusted new claims for unemployment benefits filed in the week ended March 6, the Labor Department said, a better-than-expected drop of 42,000 from the prior week’s total, which was revised higher.
The latest week’s tally was the lowest since mid-November, but still above the worst single week of the 2008-2010 global financial crisis, almost a year into the start of mass layoffs.
And in an indication that the unemployment crisis caused by Covid-19 continues, another 478,001 claims, not seasonally adjusted, were received under the Pandemic Unemployment Assistance program benefiting freelancers.
That brought the total new claims field last week to nearly 1.2 million.
Together with the February employment report released last week showing the economy is still short 9.5 million jobs compared to a year ago, this week’s data “reminds us that the healing of the labor market will take time,” Nancy Vanden Houten of Oxford Economics said.
More than 20.1 million people were receiving some form of unemployment aid as of the week ended February 20, the latest for which figures were available, the Labor Department said.
Congress on Wednesday approved Biden’s $1.9 trillion stimulus bill, which, among other things, pays for Covid-19 vaccine drives that are seen as key in getting the virus under control, and expands pandemic jobless benefits.
Ian Shepherdson of Pantheon Macroeconomics predicted the United States was at the start of a sustained decline in unemployment, as states begin reopening lifting business restrictions meant to stop the transmission of Covid-19.
“When states re-open, firms which may have been on the brink of layoffs have an incentive to hold onto staff for a while longer, at least,” he said.
“We expect this effect to become much more powerful over the next couple of months, and we expect to see jobless claims falling rapidly through the spring,” he added, predicting weekly claims would drop below 500,000 by the end of May.
