New jobless claims in the United States fell last week to their lowest level in 12 weeks, a sign of easing pressure on the job market as coronavirus infections slow.
Initial jobless claims fell to 730,000 seasonally adjusted from 841,000 the previous week, the labor department reported Thursday. Economists had predicted that weekly claims would total 838,000 people.
The federal Pandemic Unemployment Assistance Program, which provides benefits to the self-employed and others who would not qualify for regular benefits, had about 451,000 new unadjusted claimants, up from 513,000.
The labor market recovery has stammered in recent months following a resurgence of the coronavirus in most parts of the United States. Now with new infections in decline and vaccinations boosting optimism, other economic indicators such as retail and activity in the manufacturing and service sectors got off to a strong start. However, weekly complaints had been slow to reverse.
An explosion of winter weather in the central United States may have played a role in last week’s decline. Texas, where millions of residents have lost power, as well as Oklahoma received fewer new applicants than the week before, according to preliminary figures broken down by state.
Joseph Brusuelas, chief economist at RSM US, said the report “dramatically underestimates the actual pace of first layoffs in the economy” due to weather-related data volatility.
“There are always holiday and weather distortions at this time of year in unemployment claims data, so investors should anticipate an increase in claims over the next two weeks,” Brusuelas said. .
Last week also included the Presidents Day holiday, which potentially delayed some benefit claims.
California and Ohio saw sharp drops in weekly claims, unadjusted data showed. The pace of claims in Florida, Michigan, New York and Idaho has also slowed.
“The drop may signal a turning point in labor market conditions, but the data continues to suffer from noise related to arrears and fraud issues,” according to analysts at Oxford Economics. “We expect a more sustainable labor market recovery to take hold closer to the middle of the year with wider vaccine distribution and the arrival of more budget support.”
There were 4.4 million Americans actively collecting state unemployment assistance during the week that ended Feb. 13, up from 4.5 million the week earlier and 5.2 million at the start of the ‘year. The insured unemployment rate, seen as an alternative measure of unemployment, fell from 3.2 percent to 3.1 percent. Economists attributed part of the decline in continuing claims to the unemployed exhausting regular benefits.
All state and federal programs had a total of 19 million people claiming benefits as of Feb.6, according to unadjusted figures reported on a two-week delay.
A federal increase in unemployment benefits – December part stimulus bill – contributed at least in part to high levels of weekly jobless claims this year, economists said. Some states, including California, which has the largest economy in the United States, have also maintained certain coronavirus-related restrictions on business and social activities.
The United States also released revised figures Thursday morning showing the economy grew at an annualized rate of 4.1 percent in the fourth quarter. The United States Bureau of Economic Analysis previously estimated an expansion of 4 percent.
Orders for durable products in the United States also offered a bullish outlook for the economy, returning to pre-pandemic levels with a 3.4% increase in January.
U.S. stocks faltered on Thursday as investors assessed how the data might affect the debate in Washington on a new round of fiscal stimulus. The state-of-the-art S&P 500 and Nasdaq Composite both fell about 0.2%.
“What the economy needs is clear: lower numbers,” wrote Mohamed El-Erian, economic adviser at Allianz, in a Tweeter before the unemployment claims report. “What the markets want to see is less clear, especially given the political angle.”
The rate of coronavirus infection in the United States has fallen sharply this year. The seven-day average of new cases reached 66,778 on Wednesday, up from a high of 247,000 on Jan.11, according to a Financial Times analysis of data from the Covid Tracking Project. Hospitalizations fell to their lowest level since early November.