US economy

Pace of new US lay-offs eases as some states relax restrictions

Initial jobless claims in the US fell last week to their lowest level since November, in a sign that lay-offs have slowed as some states roll back coronavirus restrictions.

New unemployment filings totalled a seasonally adjusted 712,000, compared with 754,000 in the previous week, the US Department of Labor said on Thursday. Economists had forecast a smaller decline to 725,000 initial claims.

While still elevated, last week’s claims nearly matched the 711,000 reported four months ago, which was the lowest mark since the pandemic first struck the US economy in March 2020.

The Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits, took in about 478,000 new claimants on an unadjusted basis, up from 436,000.

A severe bout of winter weather in the central US probably contributed to a decline in applications for jobless benefits in late February. However the labour market has shown some signs of improvement as more states reopen their economies, encouraged by a decline in coronavirus cases and hospitalisations and the growing number of Americans vaccinated against Covid-19.

Hiring accelerated more than anticipated in February. US employers added 379,000 jobs last month, boosted by a gain of 355,000 payrolls in the beleaguered leisure and hospitality sector.

“The February jobs report confirmed a labour market recovery is under way, but showed that employment remains 9.5m below pre-pandemic levels. That shortfall, along with the elevated level of claims, reminds us that the healing of the labour market will take time,” analysts at Oxford Economics said.

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Robert Frick, corporate economist at Navy Federal Credit Union, said unemployment claims are probably on the verge of falling to much lower levels: “Assuming Covid-19 infections and deaths continue to decline, we expect lower, and perhaps dramatically lower, claims this spring.”

Congress this week approved a third round of stimulus checks and an extension to emergency unemployment aid as part of a new $1.9tn spending package. The bill faced opposition from Republicans, who argued that the economic recovery was already taking shape amid declining Covid-19 cases and a vaccine programme that has doled out more than 95m doses so far.

Arizona, Mississippi and Texas, the second-largest state by population, have recently allowed restaurants and other businesses to begin operating at full capacity again. Other states, including Michigan, Connecticut and Maryland, have also laid out plans to loosen their Covid-19 restrictions.

Advance figures indicated that most states — including Florida, Texas, New York and Pennsylvania — reported a slower pace of new jobless claims last week. California, Virginia and Ohio logged a higher number of claims than the previous week.

The jobless claims report also showed there were 4.1m Americans actively collecting state jobless aid in the week that ended on February 27. That was down from 4.3m a week earlier and 5.2m at the start of the year. Economists have attributed some of the decline in continuing claims to unemployed workers who have exhausted regular benefits.

The insured unemployment rate, considered an alternative measure of joblessness, decreased from 3.1 per cent to 2.9 per cent.

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All state and federal programmes had a combined 20.1m people claiming benefits as of February 20, according to unadjusted figures that are reported on a two-week delay. 


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