US unemployment claims have fallen sharply last week

However, the latest figures came as storms disrupted business in parts of the country and at least one state seemed to be adjusting for fraud reporting attempts, factors that could have thrown out the totals.

Ohio claims dropped significantly last week after a big hike earlier in the month, likely an attempted fraud, according to state officials. And storms and frigid temperatures in Texas and elsewhere caused widespread power outages and outages.

Recent data is broadly in line with a labor market that has remained close to neutral this winter, while other results from the economy pointed to a recovery.

Unemployment claims are being closely watched by policymakers and investors about the direction of the job market and the overall economy, but winter storms hitting Texas and elsewhere can affect layoff trends in the short term. The storms could cause temporary unemployment for some workers and it may have made it difficult for people to file claims and for state governments to process them.

“In severe weather conditions, we typically see a short-lived increase in layoffs that correct themselves within a few weeks,” said Dave Gilbertson, vice president of Ultimate Kronos Group, a workplace software company. “But at a time when the economy is already struggling to accelerate, these temporary layoffs could be devastatingly delaying the recovery.”

UKG data showed that the number of shifts of workers in the US fell last week, led by a 58.5% decline in Mississippi and nearly 50% declines in Texas and Louisiana.

Employers added just 49,000 net jobs in January, after cutting 227,000 jobs in December, the Labor Department said. Those monthly measurements marked a significant slowdown in hiring, compared to last summer, when part of the economy reopened as state restrictions loosened. By January, the economy had recovered, slightly more than half of all the jobs lost last spring.

This year, there are signs that economic activity is about to pick up as Covid-19 cases decline, more people are vaccinated, more government incentives reach households, and companies and states lift the restrictions.

According to the job search site Indeed.com, the number of vacancies at the end of January was higher than a year earlier. Aided by a new round of stimulus, retail spending accelerated in January. The Department of Commerce will release family income and spending figures on Friday in January, showing that both increased during the month.

Economists predict faster economic growth and job growth later this year, with The Wall Street Journal respondents predicting employers will add 4.8 million jobs by 2021.

“We know that there will be very rapid job growth once some of these industries – hospitality, entertainment and travel – can get going again,” said Andy Challenger, senior vice president at outplacement company Challenger, Gray & Christmas. “But right now we are in the doldrums of this recovery.”

Winter weather has likely led to temporary layoffs at construction companies and small businesses in recent weeks, Mr Challenger said. Among the larger entities his company follows, job cuts announcements are significantly lower than earlier in the pandemic, but they are getting wider and include airlines, food producers, government agencies and media companies.

A recent expansion of increased unemployment benefits and the temporary relaxation of job-search requirements could also bias recent claims data.

Late last year, Congress and then-President Donald Trump approved a $ 300 increase in unemployment benefits on top of regular government benefits, which paid an average of $ 319.02 a week last year, according to the Department of Labor. President Biden separately issued an executive action earlier this year clarifying that employees who decline a job for security reasons, including possible exposure to Covid-19, can still retain unemployment insurance.

The combination of the higher payments and more lenient enforcement of job-search requirements could lead to more workers applying for benefits, in some cases instead of looking for a job.

In addition to regular government benefits, the Labor Department reports the number of people participating in two special pandemic programs: one for the self-employed and handyman, and one for those who have exhausted other forms of benefits. The total number of pending claims filed for those two programs was nearly 12 million at the end of January. That’s more than double the estimated number who receive ongoing benefits through regular state programs, which include most U.S. workers.

Margaret Grosso, 75, has been out of work for over a year and is receiving extensive unemployment benefits. She is looking for a receptionist and administrative work, including in hospitals near her home in northern New Jersey. She said she has received two doses of Covid-19 vaccine and would like to return to work to supplement her Social Security benefits.

“I go on interviews – and I’m grateful to even get them – but they keep telling me I’m overqualified,” she said. Mrs. Grosso worked as an office clerk, account manager and before that as a model in the fashion industry. “I feel it’s something with age – it’s just really hard and daunting.”

—Sarah Chaney Cambon contributed to this article.

Write to Eric Morath at [email protected]