U.S weekly jobless claims fall, setting a new pandemic low

The number of Americans filing new applications for unemployment benefit fell below 500,000, last week, reaching a new pandemic-era low.

The Labor Department reported on Thursday that initial applications for state unemployment benefits totaled 444,000 for the week ending May 15, compared to 478,000 the previous week. It was the lowest level since mid-March 2020, and it held claims below 500,000 for two weeks in a row.

Economists polled by Dow Jones expected 452,000 new claims as the labor market recovers as a result of the country's rapid economic reopening.

While claims appear to be higher than the pre-pandemic average of around 220,000, economists expect to fall as the recovery accelerates.

The reduction in the number of claims demonstrates that the workforce is continuing to grow as Americans get vaccinated more and companies are hiring for the position which was empty due to the pandemic.

Despite the decrease in unemployment, the stabilization of labor markets is far from recovery as weekly claims remain substantially higher than pre-pandemic peaks.

In addition to the gradual decline in the headline figure, the overall number of people earning benefits fell by nearly 900,000 to just short of 16 million, according to statistics through May 1.

Applications are expected to fall lower in the coming weeks after Republican governors in at least 21 states declared that they would withdraw unemployment services plans that are federally sponsored, next month. These provided a weekly $300 subsidy, which employers claim encourages the unemployed to sit at home rather than pursue jobs.

Moreover, the enhanced benefits approved by Congress in response to the pandemic would expire in September.

Following four straight declines in jobless claims, Wall Street opened higher. The US dollar trading low against a basket of currencies while US Treasury prices increased.

Picture Credits: CNBC