U.S. states saw a bigger than expected drop in initial unemployment claims filings last week as claims fell to a fresh pandemic-era low.
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 from the report, compared to consensus data compiled by Bloomberg:
Initial jobless claims, week ended March 20: 684,000 vs. 730,000 expected and a revised 781,000 during the prior week
Continuing claims, week ended March 13: 3.870 million vs. 4 million expected and a revised 4.134 million during the prior week
Initial unemployment claims came in below 700,000 for the first time since mid-March 2020, declining more than anticipated after last week's unexpected jump. The year-over-year improvement was even more pronounced: During the same week in 2020, new claims rocketed to more than 3 million as the pandemic's initial impacts reverberated across the labor market.
"The claims data can be noisy and we do not want to extrapolate too much signal from just one week of data, but overall it looks like the trend in initial claims has been moving down lately," JPMorgan economist Daniel Silver wrote in a note Thursday morning. "This suggests that the labor market has been improving in recent months as the drag from COVID-19 has been reduced, in part due to vaccine distribution."
But while claims have come down considerably from those highs, they remain sharply elevated from 2019 levels, when new claims averaged just over 200,000 per week. New claims are also still above their high from the Global Financial Crisis, when weekly claims peaked at 665,000.
And based on the total of claimants counted across all unemployment programs, a staggering number of Americans remain out of work. As of early March, nearly 19 million individuals were still claiming unemployment benefits of some form, including via the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation program, which offers extended benefits to those who have exhausted their regular state insurance. This marked an increase of more than 700,000 claimants versus the prior week.
The slow march forward for labor market progress has not been lost on policymakers. In congressional testimony on earlier this week, Treasury Secretary Janet Yellen told the U.S. House Committee on Financial Services that "we should be clear-eyed about the hole we're digging out of" even as the data shows some signs of recovery, given that the country is still down by nearly 10 million jobs compared to its pre-pandemic peak.
Still, many economists are optimistic the rebound will pick up momentum in the coming weeks and months, especially with the vaccination program accelerating across the country.
"This is likely a sign of even better things to come for the nation’s battered economy and the millions of individuals who are jobless, underemployed or have left the workforce but would like to work," Mark Hamrick, senior economist analyst at Bankrate, said in an email Thursday. "More substantial improvement could be seen as soon as the forthcoming release of the March employment data, with a pickup in hiring amid the reopening of the economy and more people being vaccinated."
States with the highest insured unemployment rates
Last week's sharp improvement in new claims was concentrated between just a couple states. New claims in Illinois plunged by about 56,000 last week on an unadjusted basis, and those in Ohio fell by 46,000. Most of the other states reporting declines saw claims fall by fewer than 10,000.
Meanwhile, states that have recently been posting the highest insured unemployment rates largely continued to lead on this metric. The insured unemployment rate represents the ratio of those claiming unemployment benefits to the total size of states' labor forces.
For the week ended March 6, Pennsylvania remained the state with the greatest insured unemployment rate at 5.8%, though this marked an improvement of 0.3 percentage points from the prior week. The U.S. Virgin Islands posted an insured unemployment rate of 5.6%, and Nevada and Alaska rounded out the top four highest state insured unemployment rates at 5.4% and 5.3%, respectively. That compared to the nationwide insured unemployment rate of 3.2%.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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