WASHINGTON (AP) – The number of Americans seeking unemployment insurance rose to 770,000 last week, a sign that layoffs remain high, although much of the U.S. economy is recovering from the coronavirus recession.
Thursday’s Labor Department report showed that unemployment insurance claims rose from 725,000 in the previous week. The numbers have dropped dramatically since the height of the recession last spring, but still show that employers in some sectors continue to lay off workers. Before the start of the pandemic, claims for unemployment benefits had never reached 700,000 in a week.
The four-week claims average, which smoothes out weekly changes, fell to 746,000, the lowest since late November.
A total of 4.1 million people continue to receive the state’s traditional unemployment benefits, down 18,000 from the previous week. Including separate federal programs designed to help workers displaced by the health crisis, 18.2 million Americans were receiving some form of unemployment benefit in the week of February 27, down 1.9 million from the previous week.
Continuous layoffs are occurring even though the general labor market is showing a solid improvement. Last month, US employers created 379,000 jobs, the biggest since October and a sign that the economy is strengthening as consumers spend more and states and cities ease restrictions on business.
No factor fully explains the still high level of weekly claims for state unemployment benefits. The figures were obscured by delays in processing and evidence of fraud at the state level. In addition, the expansion of federal unemployment benefits has probably encouraged more unemployed Americans to apply for help.
In addition, last month’s bitter winter increased unemployment claims in Texas. And California has reported an increase in enrollments because of layoffs at bars, restaurants, retailers and other service companies – all of which have been hit hard by the pandemic.
However, as vaccination accelerates, hopes for Americans to increasingly travel, shop, eat out and spend freely after a year of virus-induced contention are rising.
President Joe Biden’s $ 1.9 trillion aid package is also expected to help accelerate growth, especially with most adults receiving $ 1,400 stimulus checks this week that are expected to increase spending. An extension of $ 300 for weekly unemployment benefits until the beginning of September will also provide support, along with money for vaccines and treatments, the reopening of schools, state and local governments and struggling industries ranging from airlines to concert halls.
“Labor market tensions are ongoing, but we expect unemployment benefits claims to start to decrease as restrictions are lifted and more normal operations are resumed,” said Rubeela Farooqi, chief economist at High Frequency Economics to the USA, in a research note. “As companies return to full capacity, the prospects for employment and income will improve and, combined with fiscal support, will provide a powerful boost to the economy.”
At the same time, the country is still about 9.5 million below the number of jobs it had in February 2020. And Federal Reserve Chairman Jerome Powell suggested on Wednesday after the last Fed policy meeting that the general economic outlook remained hazy.
“The state of the economy in two or three years is highly uncertain,” Powell told a news conference after the Fed signaled that it expects to keep its basic interest rate close to zero until 2023, despite some solid economic gains and concerns about the increase inflationary pressures.
By most barometers, business activity in the economy’s vast and hard-hit service sector is still far from normal. Data company Womply said, for example, that at the beginning of last week 63% of cinemas, galleries and other entertainment venues were closed. The same occurred with 39% of bars, 32% of gyms and other sports and recreational businesses and 30% of restaurants.