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 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


(END) Dow Jones Newswires

February 25, 2021 10:37 ET (15:37 GMT)

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