In a sign that the U.S. economy and labor market are improving, new applications for unemployment benefits have fallen in the last week.
There was a total of 787,000 new filings for jobless claims in the U.S. last week. That number is the lowest total since the start of the coronavirus pandemic and the economic hardships brought on by it. That is also 55,000 fewer claims than the week before.
According to CNBC, economists surveyed by Dow Jones expected 875,000 new claims for the week ending Oct. 17.
Before this week, the previous low was on March 14 at 282,000. Those numbers immediately proceeded with mass layoffs due to the pandemic.
The number of individuals collecting unemployment through state-run programs has also decreased. According to The Wall Street Journal, the number decreased by 1 million to about 8.4 for the week that ended Oct. 10.
“We’re happy to see continuing claims fall, but the decline — even allowing for the PEUC/extended benefits effect — does not map one-to-one onto rising payrolls. Some people no longer claiming benefits may have dropped out of the labor force, while some might have taken non-payroll gig or freelance jobs. Moreover, continuing claims lag initial claims, so if initial claims start rising again, continuing claims will follow,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The job market made a strong, but partial, recovery this summer, regaining more than half the 22 million jobs lost in March and April by the time September came. However, the pace of recovery has slowed in recent months, demonstrating the prolonged economic recovery period.
“The economy has been allowed to open back up. But the question remains if people will be willing to come back, to eat a restaurant or shop at a mall, especially now that the colder weather is coming and cases are rising,” said Alfredo A. Romero, an economist at North Carolina A&T State University.
Economists surveyed by The Wall Street Journal do not expect the labor market to bring back all jobs lost due to the coronavirus pandemic and the related shutdowns until 2023 or later. This forecast has the economic recovery at a slower rate than it was six months ago.
The number of jobs available is also still lower than last year’s numbers. As of Oct. 16, job postings are 15.3 percent lower than 2019.
One reason for the sign of recovery could be the movement of workers who have exhausted their regular benefits over to the Pandemic Unemployment Assistance emergency compensation program.
The number of individuals on the Pandemic Unemployment Assistance program increased by 509,828 for the week ended Oct. 3 to 3.3 million. Individuals who enroll under that part of the program get an extra 13 weeks of compensation after having exhausted the initial 26 weeks of eligibility.
Another positive change has been that continuing claims for unemployment have decreased. Continuing claims reports operate on a one-week lag from the headline number, so the data is slightly behind new filings. However, the number of individuals getting benefits for at least two weeks went down by 1.02 million to 8.37 million.