The number of Americans applying for jobless aid continues to drop, signaling that the job market is recovering as more people are vaccinated againstand consumers resume normal activities.
Some 385,000 people filed for unemployment aid last week, a drop of 20,000 from the previous week and the lowest level since March 14, 2020, the Labor Department said Thursday. Another 76,000 claims were filed for Pandemic Unemployment Assistance, a federal program for self-employed and gig workers.
"New jobless claims have sunk to a fresh pandemic low, falling for a fifth straight week," Mark Hamrick, senior economic analyst at Bankrate, said in an email. "The seasonally adjusted headline number is now below 400,000, which has often been seen as psychologically important during past economic downturns."
The number of weekly jobless claims, which generally reflect the pace of layoffs, has fallen steadily all year, though they remain high by historical standards. The drop reflects the job market's ongoing recovery from the coronavirus recession. More Americans are venturing out to shop, travel, dine and congregate at entertainment venues. All that renewed spending is boosting hiring by companies.
Healthy job growth as benefits end
Employers have added 1.8 million jobs this year, an average of more than 450,000 a month, and businesses are posting record job openings. Still, the U.S. has 8.2 million fewer jobs than in February 2020, just before the coronavirus tore through the economy.
As of mid-May, roughly 15 million people were receiving some type of unemployment aid, according to Labor Department data. Of those, about 6 million people were receiving self-employed benefits as of mid-May, while just over 5 million were on Pandemic Emergency Unemployment Compensation, which provides jobless aid to those out of work longer than six months.
"The decline in new claims — down by nearly half since early April — shows that layoffs are receding, while the more stubborn level of continuing claims reminds us that a full recovery of jobs lost during the pandemic will be a more uneven process," economists at Oxford Economics wrote in a research note.
Job growthcompared with March, a pullback that was widely attributed to a labor shortage in some industries, especially lower-paying restaurant jobs and other employers in the hospitality sector. Half of U.S. states in a bid to spur people to look for work.
However, it's unclear how much ending benefits will do to lift job growth. Some economists point out that states' refusal of federal funds could hinder the economic recovery by taking away money that low-income Americans need to make ends meet.
"Nearly all the states cutting [unemployment insurance] still have significantly fewer jobs than before the pandemic," David Cooper of the left-leaning Economic Policy Institute noted in a blog post. "The country is simply not at a place yet where states should be cutting off supports to unemployed workers."
The Associated Press contributed reporting.