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Economic Report: U.S. jobless claims approach ‘normal’ territory, dropping to pandemic-era low of 376,000

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The numbers: Initial weekly jobless claims fell by 9,000 to 376,000 in the week ended June 5, the U.S. Labor Department said Thursday. That’s the lowest level of claims since March 2020.

Economists surveyed by the Wall Street Journal had forecast new claims would fall to a seasonally adjusted 370,000.

The number of people already collecting state jobless benefits, meanwhile, fell by 258,000 to a seasonally adjusted 3.5 million in the week ended May 29. These are known as continuing claims. This is also the lowest level since the onset of the pandemic early last year.

Big picture: Jobless claims have been on a clear downtrend as the economy recovers from the pandemic. Claims are starting to be “within sight” of more normal levels, said Douglas Porter, chief economist at BMO Capital Markets. Claims were in the low 200,000 levels just before the pandemic.

What happened: The downward trend in claims is not showing up yet in the emergency programs set up during the pandemic.

Another 71,292 applications for jobless benefits were filed last week through a temporary federal relief program, down 1,957 from the prior week. These claims had peaked last year at well over 1 million a week.

Some 5.2 million people who have exhausted state compensation were also getting extra $300 a week in federal benefits as of May 22. The federal program ends in September and more than two dozen states are going to end the program early starting in the middle of this month.

Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs totaled 15.34 million as of May 22. That’s only down about 100,000 from the prior week. Last year, 30 million Americans were receiving these extra benefits.

What are they saying? “Since that big drop during the week of April 10, claims have been grinding lower, week by week. Barring a resurgence in virus cases and a reversal of the progress made on reopening and increasing capacity, we doubt that we will see a significant back up in claims any time soon. With more vaccines being distributed every day, this scenario is becoming less and less likely over time,” said Thomas Simons, economist at Jefferies.

Market reaction: Stocks
DJIA,
+0.30%

SPX,
+0.34%

moved higher after the May consumer price inflation, which showed year-over-year headline inflation rose to 5%, a thirteen-year high. The S&P 500 index notched its first intraday record since May 7. Yields on the 10-year Treasury note
TMUBMUSD10Y,
1.493%

spiked early in the session after the inflation data but they retraced the higher move.

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