The number of Americans seeking unemployment aid fell last week to 498,000, the lowest point since the viral pandemic struck 14 months ago and a sign of the job market’s growing strength as businesses reopen and consumers step up spending.
Thursday’s report from the Labor Department showed that applications declined 92,000 from a revised 590,000 a week earlier. The number of weekly jobless claims — a rough measure of the pace of layoffs — has declined significantly from a peak of 900,000 in January as employers have ramped up hiring.
At the same time, the pace of applications is still well above the roughly 230,000 level that prevailed before the viral outbreak tore through the economy in March of last year.
As vaccinations have been more widely administered, restrictions on businesses have gradually lifted and consumers have become more willing to travel shop, and dine out, stronger spending has boosted hiring, slowed layoffs, and accelerated growth. The economy grew last quarter at a vigorous 6.4% annual rate, with expectations that the current quarter will be even better.
The rapid turnaround has led many businesses, especially restaurants and others in the hospitality industry, to complain that they can’t find enough workers to fill open jobs. Some other employers are raising pay to attract applicants.
Pointing to the $300-a-week federal jobless check that was included in a $1.9 trillion rescue package enacted in March, some employers have complained that some unemployed people can receive more money from jobless aid than from a job.
The complaints have led Gov. Greg Gianforte to announce that Montana would stop issuing the federal unemployment payments at the end of June. Instead, the state will use some of the federal money to pay $1,200 bonuses to unemployed workers who take jobs. Montana’s unemployment rate has fallen to 3.8%. About 30,000 people are receiving jobless aid in Montana.
Other states are ending a pandemic-era exemption to long-standing rules that required aid recipients to show that they were looking for jobs in order to keep receiving unemployment. That requirement was suspended during the pandemic but has recently been reinstated in Florida and New Hampshire.
Andrew Stettner, a senior fellow at the Century Foundation, disputed the notion that unemployment benefits are dissuading many people from taking jobs. He noted that jobless claims are declining faster in states where hiring is strong, indicating that many of the new hires had previously been receiving unemployment aid.
“It will take many months of economic recovery, vaccine progress and rebuilding of the child care infrastructure before (many unemployed) are able to find suitable work,” Stettner said. “Until then, enhanced unemployment benefits will not only sustain jobless families, but continue to power a robust recovery through greater consumer spending.”
“In other words,” Stettner said, “when the labor market recovers and job opportunities abound, workers will exit (unemployment) benefits for available jobs.”
In March, employers added nearly 1 million jobs, the most since August. Roughly the same number is expected to be reported Friday when the government issues the jobs report for April. Even so, the economy will still be more than 7 million jobs short of its pre-pandemic level.
The government’s report Thursday showed that about 16.2 million people were continuing to collect unemployment benefits in the week that ended April 17, down from 16.6 million in the previous week. That’s a sign that some former recipients have found jobs.
As economic growth has accelerated, sales of vehicles and newly built homes have soared, manufacturing output has risen and Americans on average have increased their savings and wealth. In part, this is because of $1,400 stimulus checks that were distributed to most adults and in part because many affluent households have built up savings while working from home and have benefited from a surging stock market.
Shortages of raw materials and parts have swollen prices for lumber, copper and semiconductor chips, which are critical to the housing and auto industries, among other sectors. Those higher costs, along with wage pressures, have elevated fears that inflation could accelerate.
Analysts have forecast that when the monthly jobs report is released Friday, it will show that the economy added 975,000 jobs in April, according to data provider FactSet, and that the unemployment rate fell from 6% to 5.8%. That would show that more Americans are looking for work and more employers are hiring them.
US unemployment claims fall to a pandemic low of 498,000