By Gwynn Guilford 

Workers are slowly pulling away from unemployment assistance as a U.S. economic revival picks up speed, with initial filings for benefits holding near pandemic lows and the number of people receiving help dropping.

Initial jobless claims, a proxy for layoffs, increased by a seasonally adjusted 16,000 last week to 744,000, the Labor Department said Thursday. The four-week average, which smooths out volatility in the figures, rose slightly to 723,750 from 721,250. Claims are still well above the weekly average of around 220,000 in the year before Covid-19's arrival.

The continued high rate of filings comes amid other signs of recent labor-market improvement. U.S. employers added 916,000 jobs in March, and the unemployment rate slipped to 6.0%, from 6.2% in the prior month.

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.

"If initial claims were to continue to rise from here, that might cause us to rethink the strength of the labor market recovery, but we don't expect that to happen," said Nancy Vanden Houten, lead economist at Oxford Economics, who expects an upward trajectory for the labor market to continue. The March payroll report "is a harbinger of things to come as improving health conditions and the impact of the American Rescue Plan lead to more widespread reopening of businesses and a hiring boom," she said.

Sarah House, senior economist at Wells Fargo Securities, pointed to bureaucratic distortions that have persisted in claims figures as states work to process historically high numbers of filings for regular benefits. States also are operating temporary pandemic-related programs that added millions of people to benefits rolls and those programs will continue through the summer.

Backlogs and glitches can lead to multiple filings for an individual and some state systems have struggled with unemployment-insurance fraud, Ms. House said. She also cited usual turnover in certain industries in the spring and the Easter holiday. "These are issues that can mispaint the overall picture. You really have to look at a more encompassing picture of the labor market," Ms. House said.

A number of other economic measures signal a U.S. revival is under way as vaccination rates juice consumer spending, governments relax restrictions on businesses and households, and federal stimulus funds flow through the economy.

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 past year, setting in motion a post-pandemic spending boom. Consumer spending in March was 24% higher than in February, according to data from Earnest Research, which tracks credit- and debit-card purchases.

Moreover, the number of people receiving unemployment assistance is slowly declining. Continuing claims, which provide an approximation of the number of people receiving benefits, at the end of March reached their lowest level of the pandemic, declining slightly to 3.73 million. A broader reading that includes state and pandemic-related federal programs also eased slightly to 18.16 million.

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 labor market still has a long way to go in healing. As of March, U.S. payrolls remained 8.4 million below where they stood in February 2020 before the pandemic hit. More than 4.2 million people had been unemployed for six months or more, the most since 2013. And 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."

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

 

(END) Dow Jones Newswires

April 08, 2021 12:52 ET (16:52 GMT)

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