Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. weekly jobless claims drop to fresh 14-month low; economic recovery gaining speed

Economic IndicatorsMay 27, 2021 01:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits dropped more than expected last week as layoffs subsided, with companies desperate for workers to meet surging demand unleashed by a rapidly reopening economy.

The economy, which in the first quarter notched its second-fastest growth pace since the third quarter of 2003, is gaining speed, with other data on Thursday showing business spending on equipment accelerated in April. Activity is being boosted by the COVID-19 pandemic's easing grip and nearly $6 trillion in relief provided by the government over the past year.

"The economy is off and running," said Scott Hoyt, a senior economist at Moody's (NYSE:MCO) Analytics in West Chester, Pennsylvania. "Going forward growth will be supported by the pent-up savings that households have amassed during the pandemic."

Initial claims for state unemployment benefits fell 38,000 to a seasonally adjusted 406,000 for the week ended May 22, the Labor Department said. That was the lowest since mid-March 2020 and marked the fourth straight weekly decline in applications.

The decrease was led by Washington state, Florida and New Jersey. Economists polled by Reuters had forecast 425,000 applications for the latest week. Though claims remain well above the 200,000 to 250,000 range that is viewed as consistent with healthy labor market conditions, they have dropped from a record 6.149 million in early April 2020.

Pandemic-related restrictions on businesses have been rolled back, with more than half of adults in the United States fully vaccinated against COVID-19, leaving factories, construction sites, restaurants and bars, among many, clamoring for workers.

The labor shortage, despite nearly 10 million Americans being officially unemployed, has been blamed on the safety net, strengthened during the pandemic by the government, to provide a temporary lifeline following the unprecedented economic and human carnage caused by the virus. (Graphic: Jobless claims, https://graphics.reuters.com/USA-STOCKS/jznpnrygmpl/joblessclaims.png)

Republican governors in at least 23 states, including Florida and Texas, have announced they are ending unemployment programs funded by the federal government next month, including a weekly $300 subsidy, which businesses say are discouraging the jobless from seeking work.

There is, however, no consensus that the generous unemployment benefits are keeping people home. According to JPMorgan (NYSE:JPM) economist Daniel Silver, an analysis of unemployment rates, wage growth and labor force participation rates in the 23 states suggested the early termination of the special benefits programs was motivated by politics rather than economics.

"While some of these states have tight labor markets and strong earnings growth, many of them do not," said Silver. "It therefore looks like politics, rather than economics, is driving decisions regarding the early ends to these programs."

U.S. stocks were trading higher. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.

BACK AT WORK

A survey by Poachedjobs.com, a national job board for the restaurant/hospitality industry, found most had returned to work, with a full schedule of 30-40 hours a week.

For others, uncertainty about future restrictions on indoor dining and fears of contracting the virus, whether they are vaccinated or not, were keeping them away.

Fewer than 100,000 people filed claims last week under the Pandemic Unemployment Assistance (PUA) program for the self-employed, gig workers and others who do not qualify for the regular state programs. The early termination of PUA and broadening economic re-engagement could push claims even lower and shrink the jobless rolls in the months ahead.

The claims report showed the number of people continuing to receive benefits after an initial week of aid dropped 96,000 to 3.642 million in the week ending May 15. The so-called continuing claims, which are reported with a one-week lag, covered the period during which the government surveyed households for May's employment report.

The decline strengthens expectations that hiring picked up this month, though raw material shortages across industries could be a constraint. The dearth of workers and scarcity of inputs were blamed for the modest 266,000 jobs created in April, a slowdown from the 770,000 added in March.

In a separate report on Thursday, the Commerce Department confirmed that gross domestic product increased at a 6.4% annualized rate last quarter. The unrevised estimate followed a 4.3% growth rate in the fourth quarter.

Before tax corporate profits slipped $0.2 billion after decreasing $31.4 billion in the October-December period. A rise in domestic nonfinancial corporation profits was offset by lower domestic financial corporation and international profits.

"Over the year, profits should be boosted more directly by services industries as we expect consumer spending to transition back to the much-larger services category," said Jay Bryson, chief economist at Wells Fargo (NYSE:WFC) in Charlotte, North Carolina. (Graphic: GDP, https://graphics.reuters.com/USA-STOCKS/xlbpgaqdqpq/gdp.png)

The strong growth momentum held early in the second quarter, with another report from the Commerce Department showing orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 2.3% in April.

These so-called core capital goods orders increased 1.6% in March. Shipments of core capital goods gained 0.9% after rising 1.5% in March. Core capital goods shipments are used to calculate equipment spending in the GDP measurement. (Graphic: Core capital goods, https://graphics.reuters.com/USA-STOCKS/bdwpkwomapm/corecapgoods.png)

With households sitting on at least $2.3 trillion in excess savings, demand booming, inventories low and profits rebounding, businesses are likely to continue investing in equipment to boost production, supporting manufacturing.

"Supply chain bottlenecks and shortages of certain materials are holding back some producers, but firms are clearly investing in increased capacity," said Chris Low, economist at FHN Financial in New York.

U.S. weekly jobless claims drop to fresh 14-month low; economic recovery gaining speed
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (12)
perplexed76 .
perplexed76 . May 27, 2021 2:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so what? restrictions out, the numbers are rather tedious.
sam sharpton
sam sharpton May 27, 2021 1:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes, that is what tends to happen when you end tyrannical lockdown restrictions. Good thing the found out Fauci is linked to the lab in Wuhan or they might still keep this grift going. The CDC on May 1, 2021 even modified their COVID-19 case monitoring to artificially reduce cases in vaccinated people. Pure data manipulation, setting PCR cycle limits to reduce false positives and not counting mild/asymptomatic cases in vaccinated people. The opposite of what they did during the pandemic to artificially increase cases. Purely a political pandemic, not science-based. Just lies to the sheep, media complicit.
Jm Vm
Jm Vm May 27, 2021 12:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jobless claims down, Covid deaths and infections down, and a new President than knows what he's doing, doesn't continually lie to American Citizens like the last one, and has the knowledge and experience to lead our Nation to a better place than we left after the disastrous last admin. 4 years of never ending drama, disaster, death, and destruction of our economy.
AG MA
AG MA May 27, 2021 12:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lay down the Kool-aide please sir. We need to evaluate you for blunt head trauma.
sam sharpton
sam sharpton May 27, 2021 12:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
True, Joe Biden has 120 years of experience in Congress - according to his own recollection - busy fighting Corn Pop and letting children rub his hairy legs.
Paul Richard
Paul Richard May 27, 2021 12:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And comment with word "Ponzi" in 1, 2, 3!
Tre Hsi
Tre Hsi May 27, 2021 11:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"U.S. weekly jobless claims drop sharply; second-quarter GDP growth unrevised at 6.4 pct" --- that socialist granpa in the white house is so clueless, he can't even destroy the american economy the right way!
Nathan Enright
Nathan Enright May 27, 2021 11:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Joe Biden? socialist? if only
ben sc
ben sc May 27, 2021 11:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
2021 will be the death nail for modern monetary policy. it is the ethos of the 1%(and wannabee 1%ers). Inflating our way to growth is creating more income inequalities.
john best
john best May 27, 2021 10:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
nice one
Kaveh Sun
Kaveh Sun May 27, 2021 10:27AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
3k a month for staying home, drinking beers, smoking weeds vs 2k working? Which one do you choose if you have a choice? If u choose work, u must be #
Bliss Bling
Bliss Bling May 27, 2021 10:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is a Nice video.... So inspiring but do anyone knows about expert Mrs Maria. Mrs Maria Jones is legit and her method works like magic I keep on earning every single week with her new strategy
Dior Star
Dior Star May 27, 2021 10:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wow I' m just shock someone mentioned expert Mrs Maria I thought I' m the only one trading with her
Dior Star
Dior Star May 27, 2021 10:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
She helped me recover what I lost trying to trade my self
Khalifa Dior
Khalifa Dior May 27, 2021 10:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I think I'm blessed because if not I wouldn't have met someone who is as spectacular as expert Mrs Maria
Khalifa Dior
Khalifa Dior May 27, 2021 10:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I think that she is the best broker I ever seen
Jim Sherman
Jim Sherman May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
you cant go inside a fast food restaurant because of lake of workers but its not because workers are making $30000 sitting at home, mom's basement
Luis Sa
Luis_S May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lake? Or lack
Luis Sa
Luis_S May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Maybe they are swimming in the lake
Terry Dude
Terry Dude May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
English please
Tyrone Jackson
Tyrone Jackson May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This guy eats fast food? Maybe that’s why he cannot put together a proper paragraph. That stuff is poison to the body and mind. And way too expensive. Eat healthy and save money.
john best
john best May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hhmmmm
Jim Sherman
Jim Sherman May 27, 2021 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
you cant go inside a fast food restaurant because of lake of workers but its not because workers are making $30000 sitting at home, mom's basement
Jouni Matero
Jouni May 27, 2021 9:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"sharply"...
Ominous Owl
Ominous Owl May 27, 2021 9:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
funny innit!
Jouni Matero
Jouni May 27, 2021 9:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yessir!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email