By Sarah Chaney
U.S. unemployment claims fell below one million last week for
the first time since the coronavirus pandemic hit the U.S. in
March, suggesting the labor-market recovery is regaining steam.
New applications for unemployment benefits dropped to a
seasonally adjusted 963,000 in the week ended Aug. 8, the Labor
Department said Thursday.
The decline marked the second weekly reduction in claims filings
after weekly totals had held steady around 1.4 million earlier in
the summer. Worker applications for jobless aid were down
significantly from a peak of near seven million in March, but
remained historically high and above the prepandemic record of
The number of people collecting unemployment benefits through
regular state programs, which cover the majority of workers, also
decreased at the beginning of August. That figure, at about 15.5
million, was still well above the prepandemic peak of 6.6 million
The decline in jobless claims indicates layoffs are easing and
hiring is picking up, said Julia Pollak, economist at job site
"There may now just finally be enough activity to make
businesses feel confident enough to try to open their doors, even
though they're running at a low capacity in most cases," she
The drop in claims could also reflect waning fiscal support, Ms.
Pollak said. The expiration of the extra $600 a week in benefits
puts much less money in unemployed individuals' pockets, possibly
discouraging them from seeking benefits.
Without the $600 weekly boost, payments dropped to the level set
by states, which averaged about $330 a week for the 12 months
through June, according to the Labor Department.
Gus Faucher, economist at PNC Financial Services Group, said the
income boost helped prop up outlays for many households. Without
it, some consumers will likely cut back on their spending this
"That is going to be a drag on the recovery," he said.
The Commerce Department releases fresh figures on retail sales
Friday, and economists estimate sales rose at a slower pace in July
than in the spring. Newer data suggest retail spending weakened
this month, likely a result of the expiring unemployment aid.
President Trump signed an executive action Saturday that
authorized states to extend a federally funded $300 in benefits and
provide an extra $100 in state-funded benefits. States likely won't
start implementing the supplemental benefits for weeks, as they
must apply for the federal funds and set up new programs.
Actual claims figures -- numbers not adjusted for seasonal
factors -- dropped as well, falling by 156,453 to 831,856.
Economists have been watching for distortions in the seasonally
adjusted figures, given the scope of shifts in economic data caused
by the pandemic.
Some workers who don't qualify for benefits under regular state
programs -- such as the self-employed, gig workers and parents who
can't find child care -- can collect benefits under a federal
stimulus bill passed in March. About 10.7 million individuals were
collecting benefits through this program at the end of July, a
decline from the previous week's 13 million.
Economists are watching claims figures to see if they tick back
up due to the extension of expanded unemployment aid. Many people
who have returned to the workforce are also finding that new jobs
can be short-lived as the U.S. struggles to contain the virus.
A Cornell University survey that showed about 31% of workers who
were placed back on payrolls after an initial layoff were laid off
a second time.
Fort Lauderdale, Fla., resident Zack Matthews has lost his job
multiple times in recent months. Mr. Matthews was laid off from his
creative director position at a telecommunications company in
When his unemployment benefits didn't come through, Mr. Matthews
picked up a job as an overnight manager at a bar and grill in late
June, but he was laid off two weeks later.
Mr. Matthews started a new job at the end of July as a
production manager at a photo and video studio. His unemployment
benefits arrived in two lump-sum payments at the beginning of
August, four months after he had first applied for them.
"It's been quite a year," Mr. Matthews said.
Other indicators also suggest the battered labor market is
healing and likely past the worst of the crisis. Employers added
1.8 million jobs in July, the third consecutive month of hiring
gains. The jobless rate fell last month to 10.2% after peaking near
15% in April.
ZipRecruiter measures of job searching are modestly trending up
but remain below prepandemic levels.
Four-fifths of the increase in unemployment between February and
May was likely temporary, the Trump administration estimated
Thursday in a report. The Council of Economic Advisors report also
said coronavirus relief spending has significantly reduced the
economic pain caused by the pandemic.
Tara McCracken, Goodwill Industries International Inc.'s
director of workforce development in Northwest North Carolina, said
the agency has seen greater demand for its job-search programs
within the past two months.
"They want to get to work," Ms. McCracken said, noting job
openings in the leisure-and-hospitality industry -- the lifeblood
of Asheville, N.C.'s economy -- have been scarce, but appeared to
tick up last week.
Kim Mackrael contributed to this article.
Write to Sarah Chaney at email@example.com
(END) Dow Jones Newswires
August 13, 2020 13:45 ET (17:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.