By Gwynn Guilford 

Weekly unemployment claims are close to their lowest level since the Covid-19 pandemic hit more than a year ago, adding to evidence that layoffs are easing as an economic revival gathers force.

Economists surveyed by The Wall Street Journal expect worker filings for initial jobless claims, a proxy for layoffs, to have fallen to 694,000 last week, from 719,000 the preceding week.

That would bring the four-week average -- which smooths out volatility in the weekly figure -- to its lowest point since the pandemic began, though still well above pre-pandemic levels. Weekly claims averaged around 220,000 in the year before Covid-19's arrival.

With nearly one-quarter of U.S. adults now fully vaccinated, consumers are spending more on gyms, restaurants, hotels and other services they had shunned over the last year, setting in motion a post-pandemic spending boom. Economists are closely watching unemployment claims numbers for signs that layoffs are moderating as businesses scramble to keep up with consumers.

"The movement overall is in the right direction," Mark Hamrick, senior economic analyst at Bankrate.com, said. "As we get closer to herd immunity, as restrictions can be lifted -- think about dining rooms that can go from 50% to 100% capacity and baseball stadiums that can be 100% instead of 10%--those are things that get us closer to where we were before."

A steady drop in jobless filings would add to signals that the labor market is improving as vaccination rates juice consumer spending, governments relax restrictions on businesses and households, and federal stimulus funds flow through the economy.

U.S. employers added 916,000 jobs in March, and the unemployment rate slipped to 6.0%, from 6.2% in February. Real-time data on job openings indicate a surge in labor demand. Postings on Indeed, a job-search site, are now 16% above where they were in February 2020. The pace of growth in job postings has accelerated in recent weeks and is now higher than during the summer of 2020 hiring rebound.

Demand for workers in sectors that thrived during the pandemic is well above precrisis levels. Job postings on Indeed for manufacturing, loading and stocking positions are now up more than 50% from February 2020, just before the coronavirus was declared a pandemic.

The U.S. services sector, which had remained depressed throughout the pandemic, picked up sharply in March. The Institute of Supply Management's measures of growth in business activity and new orders hit their highest marks since records began in 1997. Factory activity, meanwhile, continued to improve, with ISM's index of manufacturing-sector growth rising to levels last seen in 1983.

Two Men and a Truck, a moving and storage company with more than 350 locations nationwide, is on a push to hire 2,000 workers this month. But it is struggling to recruit the labor it anticipates needing for the spring and summer, typically its busiest season, said Sara Bennett, the company's chief talent officer.

"We're not just seeing the hiring rate decrease -- we're also seeing the applications decrease," she said. Retaining good employees has also proved challenging over the past year, she added, saying the company's staffing woes are in part due to having to compete with warehousing, delivery and other hot sectors for workers.

"Any employee in those industries is in seriously high demand. That's made things difficult for us," said Ms. Bennett. "And with the pandemic -- obviously there's a fear of that that's still out there, though the vaccines have helped people feel safer and more comfortable."

The economic rebound is arriving sooner than many economists expected at the start of 2021, before a $1.9 trillion stimulus package was signed into law, and amid a slower-than-expected rollout of Covid-19 vaccines. Now, more than 108 million U.S. residents have received at least one shot, according to the U.S. Centers for Disease Control and Prevention.

However, labor demand will have to bounce back much more before employment returns to pre-pandemic levels. Labor Department data show that although job openings neared a record high in February, the 7.4 million openings were still fewer than the number of unemployed Americans, which totaled nearly 10 million that month.

Many who have left the unemployment rolls have taken jobs with lower pay and fewer hours.

Jacob Rheaume, 29 years old, was laid off in October from his job as an associate attorney at a small corporate law firm in Chicago.

After collecting unemployment insurance for two months, he launched a solo practice offering legal services around the cannabis industry and said he is earning enough to stay afloat. Mr. Rheaume said he has burned through his entire savings over the past year covering rent, living expenses and healthcare costs.

"I've been trying to reinsert myself back into the market, but it's just so saturated with qualified people right now it's really slim pickings," said Mr. Rheaume, who added that he has noticed starting law salaries have fallen. "There's sort of a famine mentality right now -- if you're lucky enough to get a job offer at a time like this, I think it would be very difficult for people to turn down."

More than 4.2 million people had been unemployed for six months or more in March, the most since 2013. Total continuing claims, a proxy for the number of people receiving benefits, hit 18.2 million in the week ended March 13, down from 19.7 million a week earlier. The majority of these received aid through two federal pandemic programs that were recently extended, though those figures have been particularly volatile.

Write to Gwynn Guilford at gwynn.guilford@wsj.com

 

(END) Dow Jones Newswires

April 08, 2021 05:44 ET (09:44 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.