Total number collecting unemployment benefits through state programs falls to lowest level since 1970
Help wanted sign at a New York City restaurant last month. Continuing claims for jobless benefits are at the lowest level since 1970.
PHOTO: LEVINE-ROBERTS/SIPA USA/REUTERS
New applications for unemployment benefits edged lower last week, remaining near historically low levels, reflecting a tight labor market as Covid-19 cases continued to decline.
Initial jobless claims, a proxy for layoffs, fell by 17,000 to a seasonally adjusted 232,000 for the week ended Feb. 19, down from the revised 249,000 the week before, the Labor Department said on Thursday. The four-week moving average, which smooths out volatility, also fell.
Continuing claims, a proxy for the total number of people on unemployment rolls through regular state programs, declined by 112,000 to 1.5 million for the week ended Feb. 12—the lowest level since 1970. The four-week moving average of continuing claims that week was at its lowest since June 1973. Continuing claims are reported with a one-week lag.
In a separate report Thursday, the Commerce Department said the U.S. economy grew at a 7% annual rate in the fourth quarter of 2021 from the prior quarter, up from its earlier estimate of a 6.9% pace. Gross domestic product rose 5.6% in all of 2021, when comparing the fourth quarter of 2021 to the same period a year earlier, up from its prior estimate of 5.5%, the department said.
“Demand for labor is strong and there are no reasons to believe that this will change any time soon, barring another wave of a new COVID variant,” said Thomas Simons and Aneta Markowska of Jefferies Financial Group Inc. in a note. “We expect that both initial and continuing claims will continue to grind lower in the weeks ahead.”
Mr. Simons said in an interview the low level of continuing claims number reflects the overall strong demand for labor. He added, that “if we were to look at the amount of continuing claims relative to the total working-age population now, it would be even significantly lower than it was in 1970.”
Covid-19 cases and hospitalizations began to fall sharply in recent weeks, while deaths have also recently begun to decline. Some states have announced plans to roll back pandemic-related restrictions, though a subvariant of Omicron, known as BA.2, recently emerged and has raised questions on whether some countries are ready for a full reopening.
Despite Omicron’s disruptions last month, some indicators have shown that the economic impact of the variant was limited. U.S. employers added 467,000 jobs in January as more people entered the workforce while average hourly earnings climbed 5.7% from a year earlier. The unemployment rate last month reached 4%.
Retail sales rose at a brisk pace in January from the month before, the Commerce Department said last week, and U.S. economic growth picked up this month, fueled by a rebound in the services sector, according to recent surveys.
The rebound of the services sector is expected to gain more steam if the pandemic continues to recede and consumers resume more activities they avoided during the pandemic.
“Consumer demand is likely to increase more going forward in areas that have been suppressed by the pandemic, like in restaurants, medical services, travel-related services—services that are supplied in person,” said Erica Groshen, an economist at Cornell University.
Job openings in industries that require in-person work with consumers, like leisure, hospitality, healthcare and social assistance, remained near record highs in December, according to the most recent available data from the Labor Department.
Still, inflation, which reached 7.5% last month—the fastest rate since February 1982—remains a challenge for both consumers facing higher prices and businesses confronting higher costs of attracting and retaining talent.