Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

U.S. labor market powers ahead as weekly jobless claims fall, layoffs hit 24-year low

Economic IndicatorsSep 02, 2021 12:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: An In-N-Out Burger advertises for workers at their restaurants location in Encinitas, California, U.S., May 10, 2021. REUTERS/Mike Blake/File Photo/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for jobless benefits fell last week, while layoffs dropped to their lowest level in more than 24 years in August, suggesting the labor market was charging ahead even as new COVID-19 infections surge.

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 unemployment rolls tumbling to a 17-month low in the third week of August.

Declining layoffs should help to ease concerns about the economy even if August's closely watched employment report on Friday shows a slowdown in nonfarm payrolls growth.

"Regardless of tomorrow's report, keep in mind that the weekly jobless figures say the labor market screws continue to tighten," said Chris Rupkey, chief economist at FWDBONDS in New York. "There is no sign that the Delta variant is leading to job losses across the country."

Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 340,000 for the week ended Aug. 28, the lowest level since mid-March 2020 when mandatory closures of nonessential businesses were enforced to slow the first wave of coronavirus cases.

There were notable declines in applications in California, Illinois and Virginia, while Ohio and Missouri reported big increases. Economists polled by Reuters had forecast 345,000 applications for the latest week.

Claims have dropped from a record 6.149 million in early April 2020. They, however, remain above the 200,000-250,000 range viewed as consistent with healthy labor market conditions.

The latest wave of COVID-19 cases, driven by the Delta variant of the coronavirus, and an acute shortage of workers have left some economists expecting moderate job gains in August. Labor market indicators last month were mixed, with a measure of factory employment contracting and private payrolls undershooting expectations. But hiring by small businesses accelerated and consumers' views of the labor market remained fairly upbeat.

Stocks on Wall Street were trading higher, with the S&P 500 index touching a record high. The dollar slipped against a basket of currencies. U.S. Treasury prices were mixed.


While last week's claims data has no bearing on August's employment report as it falls outside the survey period, applications trended lower last month. The claims report showed the number of people continuing to receive benefits after an initial week of aid plunged 160,000 to 2.748 million in the week ended Aug. 21, the lowest level since mid-March 2020.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 750,000 jobs last month after rising by 943,000 in July.

"We expect the jobs report to show that the economy continued to add jobs at a rapid pace in August, defying COVID-19 Delta variant outbreaks across the country," said Julia Pollak, chief economist at ZipRecruiter. 

That optimism was underscored by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by U.S.-based employers decreased 17% to 15,723 in August, the lowest number since June 1997. So far this year, employers have announced 247,326 job cuts, down 87% compared to the same period last year.

The pandemic has upended labor market dynamics, creating worker shortages even as 8.7 million people are officially unemployed. There were a record 10.1 million job openings at the end of June. Lack of affordable childcare, fears of contracting the coronavirus, generous unemployment benefits funded by the federal government as well as pandemic-related retirements and career changes have been blamed for the disconnect.

The labor crunch is expected to ease starting in September. The government-funded unemployment benefits lapse on Sept. 6 and schools are reopening for in-person learning.

But soaring COVID-19 cases could cause reluctance among some people to return to the labor force. The claims report showed about 12.2 million people were receiving benefits under all programs in mid-August. This number is expected to drop sharply after next Monday's expiration of government programs, which will affect about 7.5 million people.

About 25 states led by Republican governors terminated the expanded benefits several months ago. Those steps did not lead to an increase in hiring, leaving some economists to caution against expectations for an increase in the labor pool.

"Many states already have ended the programs ahead of the federal expiration but so far we have yet to see clear changes associated with the ends of these programs in many of the different variables we have studied," said Daniel Silver, an economist at JPMorgan (NYSE:JPM) in New York.

The labor market recovery is gaining steam despite a slowdown in economic activity caused by the latest coronavirus wave, fading fiscal stimulus and supply constraints. As a result of the expiration of the expanded benefits, weekly unemployment checks for nearly 3.0 million people will be reduced by $300, which economists say will hurt consumer spending.

But the moderation in growth is likely to be mitigated by a shrinking trade deficit. The trade gap narrowed 4.3% to $70.1 billion in July, the Commerce Department said in a separate report on Thursday.

Economists have sharply marked down their gross domestic product estimates for the third quarter to a low as a 2.9% annualized rate from as high as a 9% pace. The economy grew at a 6.6% rate in the second quarter.

"The slowdown is not broad-based and primarily reflects payback from stimulus spending and ongoing supply issues," said Ellen Zentner, chief U.S. economist at Morgan Stanley (NYSE:MS) in New York.

U.S. labor market powers ahead as weekly jobless claims fall, layoffs hit 24-year low

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’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
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 (3)
William Bailey
William Bailey Sep 02, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No more free credit to corporate thugs
Stan Smith
Stan Smith Sep 02, 2021 12:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"celebrating 340k in new unemployment claims??? - lets face it the economy is collapsing. In "normal" times - there would be no wailing and jumping up and down over a number like this. The self inflicted covid depression is not ending."
Ronald Warren
Ronald Warren Sep 02, 2021 11:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What a bunch of horse pucky Couldn't even finish the piece. 340,000 lost jobs can never be good. We're looking at 1.5 million lost jobs for August. The new payroll number this week was only 300,000. What's going on? Socialist Media!!
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
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'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
Sign up with Email