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U.S. unemployment rolls shrinking in boost to labor market recovery

Economic IndicatorsAug 05, 2021 12:02PM ET
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© Reuters. FILE PHOTO: People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira Karaoud/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits declined further last week, while layoffs dropped to their lowest level in just over 21 years in July as companies held on to workers amid a labor shortage.

The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed the number of people on state jobless rolls dropped in late July to its lowest level since March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 cases.

Though the data falls outside the survey period for July's closely watched employment report, it bolstered economists' expectations for another month of strong payrolls gains. The employment report for July is due to be released on Friday.

"From an employment-estimating perspective, this suggests a hefty increase in nonfarm payrolls tomorrow," said Chris Low, chief economist at FHN Financial in New York.

Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 385,000 for the week ended July 31. Data for the prior week was revised to show 1,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast 384,000 applications for the latest week. Unadjusted claims, which economists say offer a better read of the labor market, decreased 20,602 to 323,763 last week.

There is no sign yet that a resurgence in COVID-19 infections, driven by the Delta variant of the coronavirus, is disrupting economic activity. Nearly half of the population has been fully vaccinated.

Claims fell in Florida, one of the states hardest hit by the current COVID-19 wave. There were also notable declines in applications in Texas, Pennsylvania, Michigan and Tennessee.

"The latest week's data was the first in the thick of rising Delta variant COVID-19 cases, and so far that rise in infections hasn’t pushed up layoffs," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. "Together with microdata such as airline flights and restaurant bookings, it appears that for now, the economy overall is holding fast against the fourth wave of infections."

Claims remain above their pre-pandemic level of 256,000, though they have dropped from a record 6.149 million in early April 2020. There are still concerns that rising coronavirus cases could slow the labor market recovery amid a shortage of workers. There were a record 9.2 million job openings as of the end of May. About 9.5 million people are officially unemployed.

(GRAPHIC: Jobless claims - https://graphics.reuters.com/USA-STOCKS/znpnedoryvl/jobless.png)

The economy fully recovered in the second quarter the sharp loss in output suffered during the very brief pandemic recession. A separate report from the Commerce Department on Thursday showed the U.S. trade deficit surged to a record high in June as efforts by businesses to rebuild inventories to meet robust consumer spending drew in more imports.

Stocks on Wall Street were trading higher on the claims data. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.

(GRAPHIC: Trade balance - https://graphics.reuters.com/USA-STOCKS/movanmzggpa/tradebal.png)

EYES ON JULY PAYROLLS

The claims report showed the number of people continuing to receive benefits after an initial week of aid dropped 366,000 to 2.930 million during the week ended July 24, the lowest level since the pandemic started. The decline in the so-called continuing claims was led by California, which saw 256,370 people dropping off unemployment rolls.

Continuing claims declined 59,809 in Pennsylvania. There were also decreases in some of the states led by Republican governors that terminated federal government benefits before their Sept. 6 expiration.

Republicans and business groups have blamed enhanced unemployment benefits, including a $300 weekly payment from the federal government, for the labor crunch.

Still, the labor market recovery has a long way to go. About 12.975 million people were receiving unemployment checks under all programs in mid-July.

The Labor Department is expected to report on Friday that nonfarm payrolls increased by 870,000 jobs in July after rising 850,000 in June, according to a Reuters survey of economists. That would leave employment about 5.9 million jobs below its peak in February 2020.

July's nonfarm payrolls estimate is highly uncertain, with labor market indicators mixed. In a separate report on Thursday, global outplacement firm Challenger, Gray & Christmas said job cuts announced by U.S.-based employers fell 7.5% to 18,942 in July, the lowest number since June 2000.

So far this year, employers have announced 231,603 job cuts, down 87.5% compared to the same period last year.

(GRAPHIC: Challenger Gray - https://graphics.reuters.com/USA-STOCKS/myvmnmwerpr/challenger.png)

Data from Homebase, a payroll scheduling and tracking company, showed its employees working index rose moderately in July from June. The ADP employment report on Wednesday showed the smallest private payrolls gain in five months in July.

That was, however, countered by two Institute for Supply Management surveys showing a rebound in manufacturing and services industries employment last month. The Conference Board's labor market differential, derived from data on consumers' views on whether jobs are plentiful or hard to get, in July hit its highest level since 2000.

"Labor market churn will pick up further in the coming months as the conditions in the labor market remain ripe for workers to seek better opportunities," said Dante DeAntonio, a senior economist at Moody's (NYSE:MCO) Analytics in West Chester, Pennsylvania.

U.S. unemployment rolls shrinking in boost to labor market recovery
 

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Comments (9)
ben sc
ben sc Aug 05, 2021 4:04PM ET
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6 million less employed than pre rona and the gdp has fully recovered. that means 6 million ppl had their income redistributed to amazon,Amazon,, and all the other patriotic corporations that have profited from lock downs. this has to stop.
Vlad Lozovskiy
Vlad Lozovskiy Aug 05, 2021 11:47AM ET
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Main thing is to allow dead beaters to stay in someone's property forever.
perplexed76 .
perplexed76 . Aug 05, 2021 11:16AM ET
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yeah, they jumped twice on 360k, now they rising because "it declines". The art of interpreting numbers
Josh Davis
Josh Davis Aug 05, 2021 11:15AM ET
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If the market is recovering why did they extend the evictions moratorium?
James Pattison
James Pattison Aug 05, 2021 10:44AM ET
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So we dont need anymore stimulus
Jokers R Us
Jokers R Us Aug 05, 2021 10:44AM ET
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stimulus will always be here, markets are 100% reliant on government spending and manipulation.
Joseph Armour
Joseph Armour Aug 05, 2021 10:43AM ET
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Wow. What a way to discredit comments about an article. They completely rewrote this entire article from an hour ago. Got to give you credit, best way to make a critic look stupid is change your statement while keeping their initial comments attached. Hey, just like the police do every day. You sure your not 'law enforcement'?
AIM Investor Journal
AIM Investor Journal Aug 05, 2021 10:39AM ET
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Buried in the article - "A separate report from the Commerce Department on Thursday showed the U.S. trade deficit surged to a record high in June" and an attempt to spin this as positive. There will be a tumultuous crunch once reality sinks in. I'm ready for gold $2.5/oz, platinum $1.7k/oz, palladium $4k/oz, silver $50/oz and rhodium $30k+
me ish
me ish Aug 05, 2021 9:58AM ET
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"The economy fully recovered in the second quarter the sharp loss in output suffered during the very brief pandemic recession" - really? fully recovered? with millions of renters not having to pay any rent to landlords? the term fully recovered adjusted for money supply growth? Seriously? Who on Earth are these folk kidding?
Darryl Allen
Darryl Allen Aug 05, 2021 9:58AM ET
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Fooling Democrats everywhere
Joseph Armour
Joseph Armour Aug 05, 2021 9:40AM ET
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There seems to be some funny math going on here. 384k-231k=153k. What information your not sharing with us are you using to make your 21 year boast. It's obviously not the Unemployment figures, yet I don't see you putting forward any other data to support your claim of lowest layoffs in 21 years.
me ish
me ish Aug 05, 2021 9:40AM ET
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yeah, I couldn't believe the 21 year boast either - raised a few eyebrows, I can tell you. But then I've lost all faith in the mainstream media anyway - the censorship and one truth, one narrative approach of the governments and media now suggests we're in an Orwellian 1984 scenario now where we must take our Soma like good little boys and girls each day to keep us from thinking too hard.
Elizabeth Alexander
Elizabeth Alexander Aug 05, 2021 9:40AM ET
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me ish Gimme a break
me ish
me ish Aug 05, 2021 9:40AM ET
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Elizabeth Alexander  Sorry, I don't understand - if you'd like to comment, actually engage brain and comment on the specifics of my opinion with reasoned logical argument - that's the general idea on these fora.
 
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