WASHINGTON (Businesshala) – The number of Americans filing new claims for jobless benefits fell last week by the most in three months, suggesting that a recovery in the labor market was gaining momentum after the recent recession, Because the wave of COVID-19 infections was starting to subside.
On Thursday the Labor Department’s weekly unemployment claims report, the most timely data on the health of the economy, also showed the number of people on the state’s unemployment roll at the end of September at an 18-month low. This bodes well for the government’s closely watched employment report for September to be released on Friday.
“The labor market is back on track after a few weeks of mounting claims, raising questions about the market’s understanding of how solid the economic outlook really is,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state unemployment benefits decreased by 38,000 for the week ended October 2, to a seasonally adjusted 326,000. This was the biggest drop since the end of June. Economists polled by Businesshala had forecast 348,000 claims for the latest week.
The unadjusted claims, which economists say offer a better reading of the labor market, fell to 258,909 from 41,431 last week. California led the decline in claims last week. There were also reductions in Michigan, Ohio, Washington DC and Missouri.
Claims had risen for three weeks in a row as California moved people to another program after the end of federal government-funded aid on September 6 to maximize their access to unemployment benefits.
The transfer, which allowed recipients to collect an additional week’s worth of benefits, boosted applications, even if it meant moving an existing claimant from one program to another. Away from California, there was an increase in claims by some automakers related to the idleness of assembly plants in some states as they try to manage the supply of semiconductors amid global shortages.
A resurgence in COVID-19 infections driven by Delta Edition also disrupted activity in the high-contact service area. It suggested some moderation in labor market conditions in earlier weeks, which was confirmed on Thursday by a separate report by global outplacement firm Challenger, Gray & Christmas, in which job cuts announced by US-based employers were announced on September 14. % increased to 17,895.
Nevertheless, layoffs were 85% less as compared to September 2020.
In the third quarter, employers announced 52,560 job cuts, the lowest since the second quarter of 1997 and 23% less than in the July-September period.
US stocks opened with gains. The dollar was stable against a basket of currencies. US Treasury prices fell.
Last month the layoffs were led by companies in the healthcare/products sector, which announced a cut of 2,673. Since the Pfizer vaccine received full-FDA approval, many health facilities have implemented the vaccine mandate.
On-going tensions in the supply chain saw industrial goods manufacturers lay off 2,328 workers in September, while warehousing businesses reported 1,936 job cuts. In the services sector, 1,679 jobs were cut.
But the increase in layoffs was dwarfed by an explosion in planned hiring, as retailers geared up for the holiday season. The Challenger report showed companies announced plans to hire 939,790 employees, compared to only 94,004 in August.
With companies eager to hire, more people are coming out of the state’s unemployment rolls. The claims report shows that the number of people receiving benefits after the initial week of aid rose from 97,000 to 2.714 million in the week ending September 25. This was the lowest level since mid-March 2020.
The total number of people taking unemployment checks under all programs declined to 4.172 million during the week ending September 18, from 5.027 million the previous week. The decline marks the end of extended benefits last month, which economists expect will increase the labor pool.
The pandemic forced some people to leave work to become caregivers. Others are reluctant to return for fear of contracting the coronavirus, while some have either retired or are seeking a career change. This has left employers desperate to fill a record 10.9 million job openings by the end of July.
Labor shortages have hit job growth, although there is optimism that recruitment picks up in September. Non-farm payrolls are expected to add 500,000 jobs last month, according to a Businesshala survey of economists.
Estimates range from 700,000 jobs to as low as 250,000. The economy created 235,000 jobs in August, the lowest in seven months. The unemployment rate is projected to fall from 5.2% in August to 5.1%.
Labor market indicators remained mixed in September. A survey by the Conference Board last week showed that consumer sentiment about the current labor market situation has softened.
The Institute for Supply Management’s measure of manufacturing employment rebounded last month after contracting in August. But ISM’s gauge of service industry employment slipped, with businesses reporting that “labor shortages (at all levels) were experienced.”