Weekly unemployment claims ticked up last week but by a smaller than expected margin, picking up slightly after reaching the lowest level since November during the prior week.
The Department of Labor released its weekly report on new jobless claims on Thursday at 8:30 a.m. ET. Here were the main metrics included in the report, compared to consensus data compiled by Bloomberg:
Initial jobless claims, week ended February 27: 745,000 vs. 750,000 expected and a revised 736,000 during the prior week
Continuing claims, week ended February 20: 4.295 million vs. 4.300 million expected and 4.419 million during the prior week
Initial jobless claims edged up only slightly after sinking far more than expected during the week ended February 20, though at least some of that drop appeared to have stemmed from data collection issues due to the extreme winter weather blanketing the country mid-month. Still, the stabilization below 750,000 suggested unemployment trends were improving even independent of temporary factors.
"We expected a substantially bigger rebound after the huge winter storm pushed claims down, so this reading suggests that the underlying trend in layoffs is falling, thanks to the reopening now underway across many states," Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in an email Thursday morning. "As always, though, two good weeks in this volatile series don’t prove anything, but whatever happens next week, we expect the trend to fall sharply over the next few months, provided the new COVID variants don’t trigger a spring wave in cases and, more importantly, hospitalizations."
Jobless claims remain multiples above levels from before the COVID-19 pandemic, when new claims were averaging just over 200,000 per week. Returning to pre-pandemic levels of employment is likely to depend heavily on the pace of business reopenings, and consumers' propensity to return to service-centric activities most deeply affected by stay-in-place orders, many economists have noted.
"I think consumers are ready to spend more on services. They’re ready to travel, they’re ready to go out to restaurants. So I would expected we see very strong services job growth as we get towards the middle of 2021," Gus Faucher, PNC chief economist, told Yahoo Finance Live on Wednesday. "And we’ll make a serious dent in the labor market, and I would expect that we’ll be back to our pre-pandemic level of employment sometime in the second half of 2022."
By state, Missouri posted the largest drop in new jobless claims last week, with these falling by about 11,000 on an unadjusted basis. The populous states of California and Florida also saw new claims drop by more than 2,000 each, though the margin of decline moderated from some previous weeks. However, states including Texas and Ohio posted notable increases in unadjusted new claims last week, with both states seeing a rise of more than 17,000.
Continuing jobless claims, which are reported on a one-week lag and measure the total number of individuals still receiving regular state unemployment benefits, declined for a seventh consecutive week last week.
But the number of Americans claiming unemployment benefits across all programs remains sharply elevated: Some 18 million Americans were still claiming benefits across all programs as of February 13, the latest date for which data is available. That included 11.8 million Americans on either Pandemic Unemployment Assistance — the federal program offering benefits to gig workers and the self-employed who do not qualify for other programs — or Pandemic Emergency Unemployment Compensation, which offers additional up to 24 weeks of benefits.
This week, the U.S. Senate is debating another $1.9 trillion coronavirus relief package, which was passed by the U.S. House of Representatives last weekend. This package would include measures extending federal unemployment benefits beyond their current March 14 expiration date. Senator Ron Wyden (D., Ore.), chairman of the Senate Finance Committee, said Tuesday that he was leading Senate Democrats in pushing for the package to include an automatic extension of unemployment benefits based on economic conditions, which would remove additional unemployment benefit cliffs going forward.
—
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: