The numbers: U.S. unemployment claims sank by 193,000 in early April to a fresh pandemic low, an unusually large decline that reflects an improving economy but also ongoing problems in processing applications for jobless benefits.
Initial jobless claims filed traditionally through the states fell to a seasonally adjusted 576,000 from 769,000 in the prior week, the government said Thursday. That’s the largest decline since August.
The number of new claims dropped below 600,000 for the first time since the pandemic began 13 months ago and touched a new low.
Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would fall to 710,000 in the seven days ended April 10, partly because of the Good Friday holiday. Claims usually decline around Easter.
Another 131,975 applications for benefits were filed through a temporary federal-relief program. That’s also a pandemic low.
Adding up new state and federal applications, the government last week received 744,894 applications for unemployment claims, based on actual or unadjusted figures. That’s yet another pandemic low.
The number of layoffs still have to decline a lot further to return to precrisis levels, however. New claims were running in the low 200,000s before the pandemic.
Note to readers: A government review found the number of distinct individuals collecting benefitshas been inflated by fraud and double counting. Widespread fraud has also resulted in at least $63 billion in improper payments, a Labor Department review estimated.
What happened: New applications for jobless benefits fell the most in California, Ohio and Virginia, based on unadjusted figures. The decline in California alone topped 75,000.
All three have struggled to cope with duplicate filings and outright fraud. Others states have as well.
These processing problems are contributing to some large weekly swings in new claims, a problem that’s unlikely to go away anytime soon. It’s quite possible based on recent patterns that claims could jump again in the next week or two.
The number of people already collecting traditional unemployment benefits, meanwhile, fell by 87,991 to 3.94 million and set a new pandemic low.
The decline is not quite as good as it looks, though. An additional 5.2 million who have exhausted state compensation were getting benefits through an emergency program funded by the federal government.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs was put at an unadjusted 16.9 million as of March 27. That’s down from 18.2 million from the prior week.
Fewer than 2 million people were getting benefits before the pandemic erupted.
The big picture: Hiring soared in March and job openings have also surged close to record highs in a sign that many companies are looking to add workers as the economy reopens and government restrictions are relaxed.
If these trends continue — it all depends on the coronavirus—new unemployment claims should fall sharply in the spring and summer. More people returning to work would give an already revved up U.S. economy an extra boost.
What they are saying? “With the vaccination drive fueling a reopening of high-contact sectors of the economy, businesses are rehiring workers laid off earlier in the downturn, and making fewer new layoffs too,” said senior economist Bill Adams of PNC Financial Services.