CHICAGO (NewsNation Now) — The number of Americans filing new unemployment claims dropped to 385,000, yet again another pandemic low and sign the economy is recovering from the coronavirus recession.
The U.S. Labor Department released its latest figures Thursday, showing claims roughly decreased by 20,000 from the previous week.
This is the first time claims have dropped below 400,000 since the coronavirus pandemic started more than a year ago, pointing to a strengthening labor market despite a worker shortage that is limiting hiring.
“New jobless claims have sunk to a fresh pandemic low, falling for a fifth straight week,” said Mark Hamrick, senior economic analyst at Bankrate. “The seasonally adjusted headline number is now below 400,000, which has often been seen as psychologically important during past economic downturns.”
The COVID-19 pandemic is subsiding because of vaccinations, allowing authorities to lift restrictions on businesses and accelerating the economy’s reopening. That has led to a surge in demand that is pushing against supply constraints.
Workers are scarce despite nearly 10 million Americans being officially unemployed. Generous unemployment benefits funded by the government, problems with child care and fears of contracting the virus, even with vaccines widely accessible, as well as pandemic-related retirements have been blamed for keeping workers home.
Initial claims have dropped from a record 6.149 million in early April 2020. They, however, remain well above the 200,000 to 250,000 range that is viewed as consistent with healthy labor market conditions.
They could decline further as Republican governors in at least 24 states, including Florida and Texas, are cutting off unemployment programs funded by the federal government for residents starting next Saturday.
These states account for more than 40% of the workforce. The benefits being terminated early include a weekly $300 unemployment subsidy, which businesses say is discouraging the jobless from seeking work.
““The realignment of employment and the economy more broadly will require more time to normalize to something new as spending increases on services and more Americans resume activities freed by vaccinations and lifting of COVID-19 restrictions,” Hamrick said.
Employers have added 1.8 million jobs this year — an average of more than 450,000 a month — and the government’s May jobs report on Friday is expected to show that they added an additional 656,000 last month, according to a survey of economists by the data firm FactSet. The economy remains down 8.2 million jobs from its level in February 2020, just before the virus tore through the economy.
Job growth slowed sharply in April compared compared with March, a pullback that was widely attributed to a labor shortage in some industries, especially at restaurants and other employers in the hospitality sector.