U.S. weekly jobless claims decline below 400,000, reaching a new pandemic low

The number of Americans making new claims for jobless benefits plummeted below 400,000 for the first time since March 2020. 

The Labor Department reported on Thursday that initial claims for state unemployment benefits totaled a seasonally adjusted 385,000 for the week ended May 29, compared to 405,000 the previous week.

The previous time claims were lower was the week of March 14, 2020, when they were 256,000. The figure rose to almost 3 million the next week and peaked in early April at over 6.1 million when US governments shut down businesses to curb the spread of coronavirus.

Economists estimate separately from the May employment data, set to be out on Friday, that last month, the economy increased to 671,000 jobs after gaining 266,000 jobs in April, and that the unemployment rate decreased to 5.9% in May from 6.1% in the previous month, WSJ reported. 

An Institute for Supply Management manufacturing report released on Tuesday also highlighted manpower and raw material shortages, which it claimed were triggering short-term shutdowns. 

Even though roughly 10 million Americans are officially unemployed, there is a labor crisis. Government-funded unemployment benefits, child care issues, and worries of getting the virus despite widely available immunizations, as well as pandemic-related retirements, have all been cited for keeping workers at home.

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

Half of the states in the United States have declared plans to phase off federal supplementary unemployment benefits in June or July, months before the program expires in early September. According to Ms. Vanden Houten of Oxford Economics, over 3.7 million people stand to lose some sort of assistance when these proposals are implemented, with well over 2 million losing all benefits, WSJ reported.