By Eric Morath
The number of workers seeking unemployment benefits fell sharply
last week, adding to signs that the job market could be stabilizing
after layoffs edged higher earlier in the winter.
Initial weekly unemployment claims decreased by 111,000 to a
seasonally adjusted 730,000 last week, the Labor Department said
Thursday. It was the lowest weekly level of new applications to
regular state programs since late November and the biggest weekly
drop since last summer.
However, the latest figures came as storms disrupted business in
parts of the country and at least one state appeared to adjust for
attempted fraud filings, factors that could have thrown off the
totals.
Claims fell significantly in Ohio last week after a large
increase earlier in the month that state officials said was likely
attempted fraud. And storms and frigid temperatures in Texas and
elsewhere caused widespread power outages and disruptions.
"The drop may be signaling a turning point for labor market
conditions," said Nancy Vanden Houten, economist at Oxford
Economics. "However the data continue to suffer from noise related
to issues of backlogs and fraud. We expect a more sustainable labor
market recovery to take hold closer to mid-year."
Jobless claims figures can be volatile from week to week. The
four-week moving average, which helps smooth those variations, fell
to 807,750 last week, the lowest reading since early December. The
recent level of applications is well down a peak of near 7 million
last spring. After trending down for months, claims edged higher
earlier in the winter.
If the latest data signals a renewed descent, weekly claims
could fall below the pre-pandemic weekly record of 695,000 set in
1982 in the coming weeks. That would suggest the economic recovery
is poised to accelerate after a winter chill, during which hiring
stalled.
There are other signs this year that economic activity is poised
to pick up as Covid-19 cases fall, more people become vaccinated,
more government stimulus reaches households, and businesses and
states lift restrictions.
The number of job openings at the end of January exceeded
year-earlier levels, according to job search site Indeed.com. Aided
by a fresh round of stimulus, retail spending accelerated in
January.
Demand for long-lasting manufactured goods jumped in January, in
part from a pronounced gain in aircraft orders, as U.S.
manufacturers continued a steady recovery from the pandemic, the
Commerce Department said. That was the ninth straight month of
gains and the largest percentage increase since July 2020. The
Commerce Department also revised up its reading of fourth-quarter
economic growth to an annual rate of 4.1%, seasonally and inflation
adjusted, versus the prior estimate of 4.0%.
There are reasons to look skeptically at the latest claims data.
Two states, California and Ohio, both which have faced a high
number of fraudulent claims, accounted for three-quarters of the
last week's total decrease, on a nonseasonally adjusted basis.
Also, winter storms that hit Texas and elsewhere could affect
layoff trends in the short term. The storms, which caused
widespread power outages and disruptions, could create temporary
unemployment for some workers and may have made it difficult for
people to file claims and for state governments to process
them.
Economists at Jefferies LLC had expected an increase in claims
in Texas, but the number of applications in the state fell last
week.
"Either we are totally off in our interpretation of the impact
of these storms on the Texas labor market, or the storms and
outages were so disruptive that people were unable to file," they
wrote in a note to clients. "Next week's data will be telling."
Ultimate Kronos Group, a workplace software firm, said the
number of shifts worked by employees across the U.S. fell last
week, led by a 58.5% drop in Mississippi and nearly 50% declines in
Texas and Louisiana. "With severe weather events, we typically see
a short-term uptick in layoffs that corrects itself within a few
weeks," UKG Vice President Dave Gilbertson said.
More broadly, economists expect faster economic and job growth
later this year, with those surveyed by The Wall Street Journal
projecting employers to add 4.8 million jobs in 2021.
"We know really fast job growth is coming as soon as some of
these industries -- hospitality, entertainment and travel -- can
get going again," said Andy Challenger, senior vice president at
outplacement firm Challenger, Gray & Christmas. "But right now
we're in the doldrums of this recovery."
In addition to regular state benefits, the Labor Department
reports the number of people enrolled in two special pandemic
programs: one for self-employed and gig workers, and another for
those who exhausted other forms of the benefits.
The combined number of ongoing claims filed for those two
programs rose to 12.6 million for the week ended Feb. 6, the Labor
Department said. That was well more than the estimated 5 million
receiving ongoing benefits through regular state programs, which
initially covers most U.S. workers.
Margaret Grosso, 75 years old, has been out of work for more
than a year and has been receiving extended unemployment benefits.
She is seeking receptionist and clerical jobs, including at
hospitals near her home in northern New Jersey. She said she has
received two doses of Covid-19 vaccine and is eager to return to
work to supplement her Social Security benefits.
"I go on interviews -- and I'm thankful I even get those -- but
they keep telling me I'm overqualified," she said. Ms. Grosso said
she worked as an office administrator, account executive and
previously as a model in the fashion industry. "I sense it's an age
thing -- it's just very difficult and discouraging."
Sarah Chaney Cambon contributed to this article.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
February 25, 2021 10:37 ET (15:37 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.