Weekly unemployment claims rose slightly last week, but rose less than expected for an economy struggling to shake off the effects of a pandemic that has been going on for nearly a year now.
The Labor Department reported on Wednesday that the first time unemployment insurance claims were filed in the week ending February 27 was a seasonally adjusted 745,000, a tad lower than the Dow Jones’ estimate of 750,000. The total was a slight increase from last week’s revised 736,000.
Unreasonably harsh Texas winter storms took their toll on the job market, resulting in an increase of 17,769 filings for the state, according to unadjusted data. Ohio and New York also saw significant increases in claims.
Persistent claims fell again, by 124,000 to just under 4.3 million, another low pandemic era, in data a week behind the headline claims number.
“We had expected a significantly larger rebound after the massive winter storm pushed claims down, so this reading suggests the underlying trend in layoffs is slowing down thanks to the reopening now underway in many states,” said Ian Shepherdson, chief economist from Pantheon Macroeconomics.
But as always, two good weeks in this volatile streak prove nothing, but whatever happens next week, we expect the trend to decline sharply in the coming months, provided the new Covid variants don’t trigger a spring wave. in cases and, more importantly, hospitalizations. The jury is out yet, ”he added.
The report comes amid predominantly positive signs for the US economy.
While economists had expected growth to start slowly in 2021, followed by an acceleration mid-year, estimates are rapidly revising upwards. The Atlanta Federal Reserve’s GDPNow tracker points to a 10% growth in the first quarter.
Still, recovering the labor market was the missing element in the broader picture. Although the unemployment rate has fallen from a pandemic high of 14.8% in April in April to 6.3% in January, there are still huge employment shortages.
A Wednesday report from ADP showed that the number of private recruitments increased by just 117,000 in February, below Dow Jones’ estimate of 225,000. The Labor Department is expected to report Friday that nonfarm payrolls are up 210,000, although the ADP number adds a downside risk to that number.
There are still about 10 million unemployed workers through February, and Thursday’s Labor Department report indicated that more than 18 million were still receiving some form of unemployment benefit until February 13.
However, that total fell by just over a million, largely due to a decrease in the number of people enrolled in special pandemic-related programs that provide benefits to those who normally do not qualify, and to those who have exhausted their regular benefits.
An incentive bill where Congress is on the cusp of action includes new allocations for improved unemployment benefits.