New US unemployment filings fell last week to their lowest level in 12 weeks, in a sign of easing pressure on the jobs market as coronavirus infections slow.
Initial jobless claims dropped to a seasonally adjusted 730,000 from 841,000 during the previous week, the labour department reported on Thursday. Economists had forecast that weekly claims would total 838,000.
The federal Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits, had about 451,000 new claimants on an unadjusted basis, down from 513,000.
The labour market’s recovery sputtered in recent months following a resurgence of coronavirus across most parts of the US. Now, with new infections declining and vaccinations boosting optimism, other economic indicators such as retail sales and activity in the manufacturing and services sectors started the year strong. However, weekly claims had been slow to recede.
A blast of winter weather in the central US may have been a factor in last week’s pullback. Texas, where millions of residents lost power, along with Oklahoma took in fewer new claimants than the previous week, according to preliminary figures that are broken down by state.
Joseph Brusuelas, chief economist at RSM US, said the report “significantly understates the true pace of first-time firings across the economy” because of weather-related volatility in the data.
“There is always holiday and weather-induced distortions this time of the year in jobless claims data, so investors should anticipate a rise in claims over the next two weeks,” Brusuelas said.
Last week also included the Presidents’ Day holiday, which potentially delayed some applications for benefits.
California and Ohio recorded sharp declines in weekly claims, unadjusted data showed. The pace of claims in Florida, Michigan, New York and Idaho also slowed.
“The drop may be signalling a turning point for labour market conditions, however the data continue to suffer from noise related to issues of backlogs and fraud,” according to analysts at Oxford Economics. “We expect a more sustainable labour market recovery to take hold closer to mid-year with broader vaccine distribution and the arrival of more fiscal support.”
There were 4.4m Americans actively collecting state jobless aid in the week that ended on February 13, compared with 4.5m a week earlier and 5.2m at the start of the year. The insured unemployment rate, considered an alternative measure of joblessness, fell to 3.1 per cent from 3.2 per cent. Economists have attributed some of the decline in continuing claims to unemployed workers exhausting regular benefits.
All state and federal programmes had a combined 19m people claiming benefits as of February 6, according to unadjusted figures that are reported on a two-week delay.
A federal increase to unemployment benefits — part of the December stimulus bill — has contributed at least in part to elevated levels of weekly jobless claims this year, economists have said. Some states including California, which boasts the largest economy in the US, have also maintained some coronavirus-related curbs on businesses and social activity.
The US also released revised figures on Thursday morning showing that the economy grew at a 4.1 per cent annualised rate in the fourth quarter. The US Bureau of Economic Analysis previously estimated an expansion of 4 per cent.
Orders for long-lasting goods in the US also offered an upbeat view of the economy, returning to pre-pandemic levels with a 3.4 per cent rise in January.
US stocks wavered on Thursday as investors weighed how the data could affect the debate in Washington over a new round of fiscal stimulus. Both the S&P 500 and tech-heavy Nasdaq Composite edged down by about 0.2 per cent.
“It is clear what the economy needs: lower numbers,” Mohamed El-Erian, economic adviser at Allianz, wrote in a tweet ahead of the jobless claims report. “Less clear is what markets wish to see, especially given the policy angle.”
The US’s coronavirus infection rate has fallen sharply this year. The seven-day average for new cases hit 66,778 on Wednesday, down from a peak of 247,000 on January 11, according to a Financial Times analysis of Covid Tracking Project data. Hospitalisations have dropped to their lowest mark since early November.
Source: Economy - ft.com
