Weekly unemployment insurance claims rose last week, but rose less than expected for an economy struggling to get rid of the impacts of a pandemic that has been around for almost a year.
The Labor Department reported that the first claims for unemployment insurance in the week ending February 27 totaled 745,000 seasonally adjusted, slightly below the Dow Jones estimate of 750,000. The total was a slight increase from the 736,000 revised up from the previous week.
Exceptionally severe winter storms in Texas have become a tool in the job market, resulting in an increase of 17,769 records for the state, according to unadjusted data. Ohio and New York also saw considerable increases in claims.
Continued complaints declined again, dropping 124,000 to just under 4.3 million, another low point in the pandemic era, in data that runs a week behind the number of headline complaints.
“We were expecting a substantially greater recovery after the huge winter storm reduced claims, so this reading suggests that the underlying layoff trend is slowing, thanks to the reopening underway in many states,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“As always, however, two good weeks in this volatile series prove nothing, but whatever happens next week, we expect the trend to drop dramatically in the coming months, as long as the new Covid variants don’t trigger a spring wave in the cases and, more importantly, in hospitalizations. The jury is still open ”, he added.
The report comes amid positive signs for the US economy.
While economists expected slow growth to begin in 2021, followed by an acceleration in the middle of the year, estimates are being revised upwards quickly. Atlanta’s Federal Reserve’s GDPNow tracker is pointing to 10% growth in the first quarter.
Still, fixing the job market was the missing element in the broader picture. Although the unemployment rate fell from a high in the pandemic era from 14.8% in April 2020 to 6.3% in January, there are still huge gaps in employment.
An ADP report on Wednesday showed that private hires rose just 117,000 in February, below the Dow Jones estimate of 225,000. The Labor Department is due to report on Friday that the non-farm payroll has grown by 210,000, although the ADP number adds some risk of falling to that number.
There were about 10 million unemployed workers left until February, and the Department of Labor report on Thursday indicated that more than 18 million continued to receive some form of unemployment insurance until February 13.
However, that total fell just over a million, largely due to a decrease in those enrolled in special pandemic-related programs that offer benefits to those who are not normally eligible, as well as to those who have exhausted their regular benefits.
A stimulus bill that Congress is about to approve contains new allocations for greater unemployment benefits.