The number of people initiating claims for unemployment benefits fell to a pandemic-era low for the fourth time in five weeks, as businesses starved for workers held on to the help they have.
In the week ending May 8, there were 473,000 initial claims for unemployment insurance, 34,000 fewer than the previous week’s revised total, according to seasonally adjusted data released Thursday by the Department of Labor. Economists had expected claims to rise, with a forecast of 509,149, according to a median estimate from Moody’s Analytics.
Initial claims have fallen by 36.3% in the last five weeks, and are now less than twice as high as they were the week of March 14, 2020 (256,000), the last reading before the pandemic locked down the economy. It’s substantial progress considering claims had been stuck for months between three and four times pre-pandemic levels.
The positive recent trend for initial claims had raised hopes that the job market had begun re-emerging from its pandemic slump, particularly after the U.S. added more jobs in February and March than expected. But a predicted hiring boom in April never materialized, with jobs numbers released last week revealing that the U.S. added only a quarter of the 1 million jobs economists expected.
The report had economists scratching their heads and even drew a response from President Joe Biden, who urged patience while also taking steps to encourage people to return to work. This week, another government report showed there were 8.1 million job openings in the U.S. at the end of March, a record high, intensifying talk of a labor shortage and its potential causes.
Layoffs Less Likely
“Claims are indeed trending lower, which is understandable given lots of headlines about companies struggling to find workers,” ING Chief International Economist James Knightley said. “Most companies aren’t going to be laying off staff they already have in such an environment.”
The shortage of workers has spilled over to the prices we pay for things like cars, furniture, and even food. Inflation in April grew at the fastest rate in 12 years and will likely continue increasing in the coming months, as businesses adjust to meet the demands of a reopening economy.
The need for workers will keep layoffs down, economists said, continuing to push initial claims for unemployment insurance—as well as the labor market as a whole—toward where they were before the pandemic. There are still 9.8 million people unemployed in the U.S.