Applications for U.S. unemployment benefits continued to decline to pandemic lows in mid-May as companies ramp up hiring efforts.
Initial jobless claims fell 34,000 to 444,000 in the week ended May 15. That’s the lowest level of claims since March 2020.
Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims to fall to a seasonally adjusted 452,000.
While new state jobless claims have been cut in half since the start of the year, they are still more than twice as high now compared to the last month before the pandemic.
The number of applications had been running in the low 200,000s before the viral outbreak early last year.
What happened: Regular applications for unemployment benefits have been falling in every state. So too are applications filed through an emergency federal program set up during the pandemic.
Just 95,086 applications for jobless benefits were filed last week through the federal relief program. They peaked last year at well over 1 million a week.
The number of people already collecting state jobless benefits, so-called continued claims, rose by 111,000 to a seasonally adjusted 3.75 million in the week ended May 8.
Some 5.1 million who have exhausted state compensation were also getting benefits through an emergency program funded by the federal government.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs totaled 16 million as of May 1. These claims had topped 30 million early in the crisis.
Fewer than 2 million people were getting benefits before the pandemic erupted.
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Big picture: Layoffs and new jobless claims are waning, but a big debate has broken out over whether extra jobless benefits are keeping some unemployed people from taking jobs.
The debate intensified after a disappointing April jobs report. Since then nearly 20 states have said they plan to stop offering a $300 weekly federal benefit in June to push people back into the labor force, a move that could affect several million people.
Whatever the case, a fast-growing economy buoyed by federal stimulus, low interest rates and high savings is expected to remain strong over the summer. The result is likely to be a lot more hiring and new jobs that adds to the economic momentum.
What are economists saying? “Continuing claims have flattened out a bit in recent weeks, but we expect they will eventually continue to drift lower, reflecting a lower level of initial claims, workers being rehired, and some individuals exhausting regular benefits,” said Nancy Vanden Houten, economist at Oxford Economics.
Market reaction: The Dow Jones Industrial Average DJIA, +0.36% and S&P 500 SPX, -0.08% rose Thursday in a bid to end a three-day losing streak. Analysts said the stronger data was driving the market.
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