Claims for unemployment benefits drop by 111,000, an improvement as pandemic shows signs of easing
New unemployment claims decreased by 111,000 last week, the biggest drop in new claims since August, and a positive sign as the coronavirus pandemic spread has slowed in recent weeks.
About 730,000 new claims were filed for traditional unemployment insurance and an additional 451,000 claims for Pandemic Unemployment Assistance, for gig and self-employed workers.
The total number of claims for all types of unemployment benefits was 19 million for the week ending Feb. 6.
Coronavirus cases have dropped sharply nationwide in recent weeks, propelling reopenings for shuttered businesses such as restaurants in states including California and New York.
The decrease in the weekly claims was powered by large drops of about 50,000 in California and 45,000 in Ohio, two states with major problems with fraudulent filings.
Although initial jobless claims are nowhere near the eye-popping levels seen last spring, they are still extraordinarily high by historical standards. There are roughly 10 million fewer jobs than there were last year at this time.
Coronavirus caseloads have been dropping amid efforts to get vaccines to people who are most vulnerable. But until employers and consumers feel that the pandemic is under control, economists say, the labor market won’t fully recover.
“Until people feel this is sustained and that there’s not another huge wave coming, I can’t imagine we’re going to see big changes in jobless claims for a while,” said Allison Schrager, an economist at the Manhattan Institute.
Leaders at the Federal Reserve and Treasury Department have said that the damage to the labor market is much deeper than has been reflected in published government figures. They estimate that the true unemployment rate is closer to 10 percent than to the 6.3 percent recorded in the Labor Department’s most commonly cited measure.
Testifying before Congress this week, Jerome H. Powell, the Federal Reserve chair, said: “The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain.”
Those hardest hit are in the service industry, particularly in restaurants, hospitality, leisure and travel. At the career site Indeed, job postings over all are 5 percent higher than they were a year ago, with demand greatest for warehouse and construction workers and drivers, said AnnElizabeth Konkel, an economist at the company.
“We need job postings to stay elevated above prepandemic baseline to pull people back into the labor market,” she said.
There have been some more positive signs in recent weeks, in addition to the drop in coronavirus cases. The monthly ISM index, a gauge of manufacturing strength, remains high. Retail sales increased 5.3 percent in January, surpassing lower expectations. And the housing market remains robust in many parts of the country.
But many economists are not expecting a broader pickup in the slumping labor market until later this year, as vaccinations power a potentially strong and lasting recovery.
Congress continues to debate the Biden administration’s $1.9 trillion stimulus package, which would deliver more relief to unemployed workers, state and local governments, and schools, as well as $1,400 stimulus payments to most individuals.
Other market news
The S&P 500 was slightly lower in early trading, a dip led by technology stocks.
Bond yields continued to jump. The yield on 10-year U.S. Treasury notes rose 5 basis points, or 0.05 percentage point, to 1.43 percent. This month, the yield has climbed 37 basis points.
Analysts at Bank of America raised their forecast for bond yields, expecting the 10-year yield to be at 1.75 percent at the end of the year because of stronger economic growth. Last month, they forecast 1.5 percent for year-end.
Federal Reserve policymakers have been playing down concerns about inflation. In a second day of testimony to lawmakers on Wednesday, the Fed chair, Jerome H. Powell, reiterated his message that a short-term jump in inflation, which is expected this year, is different from sustained higher inflation. And so the central bank could keep its easy money policies for awhile. Separately, the vice chair, Richard Clarida, said monetary policy was “entirely appropriate not only now, but — given my outlook for the economy — for the rest of the year.”
Most European stock indexes were higher. The Stoxx Europe 600 index rose slightly, while the FTSE 100 climbed about 0.3 percent.