U.S. jobless claims fell slightly to 385,000 last week, as
worker filings for new unemployment benefits settled this summer at a level
that is nearly double the pre-pandemic average.
The decrease in filings reported by the Labor Department on
Thursday comes as the economic recovery faces risks from the Covid-19 surge
driven by the Delta variant, supply-chain constraints and a shortage of
available workers. The four-week moving average, which smooths out volatility
in the weekly figures slightly decreased to 394,000.
So far, business and government responses to the Delta
variant aren’t triggering an increase in U.S. layoffs, according to the Labor
Department department report. The U.S. economy has experienced robust growth
this year with the availability of vaccines, business reopenings, pent-up
consumer demand and government aid, though economists say Delta poses a risk to
growth should it cause widespread disruptions.
Continuing claims for regular and temporary pandemic-related
federal programs, which provide an approximation of the number of people
receiving benefits, dropped by 181,000 to 13 million in the week ended July 17,
the most recent figures for that reading. The federal programs are set to
expire in early September.
Jobless claims have hovered between 368,000 and 424,000
since late May, elevated above pre-pandemic levels but significantly lower than
early in the pandemic. The 2019 weekly average, ahead of the pandemic, was
218,000.
The trend, some economists say, could be happening while the
labor market continues to recover from the pandemic and be part of a
development where claims remain higher because of greater awareness of
unemployment insurance programs.
“Many people before the pandemic just simply didn’t apply
for unemployment insurance, even if they were eligible,” Daniel Zhao, senior
economist at job-search site Glassdoor, said. “So we might see permanent higher
levels of claims, even if the jobs recovery is continuing,”
Mr. Zhao said that while the totals for new jobless claims
have started to level off, he thinks the labor market and broader economy
continue to steadily recover despite risks from the Covid-19 surge driven by
the Delta variant and supply issues.
“There is a lot of potential for job growth in the coming
months,” Mr. Zhao said.
The Labor Department will separately release the July
employment report on Friday that will show whether hiring accelerated last
month. Economists polled by the Journal estimate that 845,000 jobs were created
last month, similar to June’s total, and that the unemployment rate fell to
5.7%.
Benjamin Widner, an economics professor at New Mexico State
University, also expects job growth to continue, driven in part by industries
that allow employees to work from home.
“IT technology, cybersecurity networks, all those types of
remote-work jobs are going to be continuing to grow as we deal with the
changing structure of the economy,” Mr. Widner said. He added that he also
expects a slower decline in the number of weekly unemployment claims.
Many workers remain on the sidelines—the labor market in
June was 6.5 million workers smaller than before the pandemic—and economists
are watching to see if the surge in Delta variant cases affects the economy.
“What happens with Delta really depends on how people react
to it. The virus itself is much worse in many ways, but at the same time, in
previous surges there was no vaccine, and the only way people could avoid
getting sick was if they disengaged from the economy completely,” said Ben
Herzon, executive director of U.S. economics at IHS Markit. He added that the
labor market’s recovery is vulnerable to the possibility of an even more lethal
and contagious Covid-19 variant in the future.
Glassdoor’s Mr. Zhao said that the economic impact of the
Delta variant will likely be limited compared with previous surges because of
higher vaccinations and restrictions not being as severe as earlier in the
pandemic.
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