Claims For Weekly Unemployment Advantages Attain One 12 months Low
Reuters) – The number of Americans filing new unemployment benefits fell to an annual low last week, giving an economy poised to grow stronger if the public health situation improves and temperatures are rising.
However, the job market is not out of the woods yet. The Labor Department’s weekly jobless claims report on Thursday shows an astonishing 18.953 million people were still receiving unemployment checks in early March. It will likely take years for the pandemic’s scars to fully recover.
“Things have improved over the last year, but there are still millions of people facing real economic pain,” said AnnElizabeth Konkel, economist at Indeed Hiring Lab. “Hopefully increased vaccinations are the beginning of the end.”
Initial claims to state unemployment benefits fell 97,000 in the week of March 20 to a seasonally adjusted 684,000, the lowest level since mid-March. The data for the previous week has been revised to show that 11,000 more applications have been received than previously reported. Economists polled by Reuters had forecast 730,000 applications for the past week.
Including a government-funded program for the self-employed, gig workers, and others who don’t qualify for the regular government programs, 898,534 people filed claims last week, falling below a million US ago for the first time since the COVID-19 pandemic than a year.
The decline was led by Ohio, which was being tracked by fraudulent filings, and Illinois.
Claims rose in the second week of March, likely as residue from severe winter storms in Texas and other parts of the densely populated South region.
The freezing condition in the second half of February, which also hit other parts of the country, depressed retail sales, housing construction, production in factories, orders and deliveries of industrial goods last month.
Warmer weather, the passage of the $ 1.9 trillion COVID-19 pandemic rescue package, and increased vaccinations are expected to spur activity from March onwards.
Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell were optimistic about the economy in front of lawmakers this week.
US stocks traded lower. The dollar rose against a basket of currencies. US Treasury bond prices were mostly higher.
Corporate profits are falling
But the massive fiscal stimulus that extended government-funded unemployment benefits, including a weekly $ 300 surcharge, through September 6, could increase entitlements as some people reapply for benefits. Receivables rose to a record 6.867 million in March 2020. They remain above their high of 665,000 during the 2007-2009 Great Recession. In a healthy labor market, the demands are usually between 200,000 and 250,000.
Employment is 9.5 million jobs below its February 2020 peak. Economists say it could take at least two years for the economy to restore all 22.4 million jobs that were lost in March and April last year .
The full recovery of the labor market could take even longer as the participation rate, or the percentage of working-age Americans who have or are looking for a job, is near a 47-year low. More than 4 million workers have left the labor force as of February 2020, with women making up the largest proportion.
The number of people receiving benefits after a first week of assistance decreased by 264,000 in the week ended March 13 to 3.870 million. The decline in so-called continuing entitlements was due to people finding work and exhausting their entitlement, limited to 26 weeks in most states.
In the week ending March 6, at least 5.551 million people received enhanced benefits. Another 1.068 million participated in a government program for those who have exhausted their first six months of aid.
A separate report from the Commerce Department on Thursday showed gross domestic product rose 4.3% on an annualized basis in the fourth quarter, up from the 4.1% pace reported last month.
The goods manufacturing industry grew by 6.1%, supported by growth in the construction and manufacture of computer and electronic products and metal products.
The service industry expanded at a pace of 4.9%, thanks in part to finance and insurance, health and social assistance, and professional, scientific and technical services. They were partially offset by declines in accommodation and catering services, utility and educational services.
The government shrank at a rate of 1.1%, hurt by declines in state, local and federal government. 17 out of 22 industries contributed to GDP growth in the fourth quarter. The economy grew at a record 33.4% in the third quarter.
Earnings declined $ 31.4 billion in the most recent quarter, after rising $ 499.6 billion from July through September. They fell $ 130.2 billion in 2020 after rising $ 7.6 billion in 2019.
The worst is probably over. The economy is expected to grow by up to 7.5% in the first quarter. Growth this year could exceed 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, its worst performance in 74 years.
“We believe there is room to grow corporate profits as corporate sales grow significantly and margins continue to be well supported,” said Lydia Boussour, senior US economist at Oxford Economics in New York. “Improving health conditions, expanding vaccine distribution and generous tax incentives will be a powerful growth cocktail.”
(Reporting by Lucia Mutikani Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao)