# U.S. labor market powers ahead as weekly jobless claims fall, layoffs hit 24-year low Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-09-02 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: US Jobless Claims Drop to 24-Year Low as Layoffs Plummet Meta Description: Latest data from the Labor Department shows drop in layoffs and decrease in unemployment rolls, indicating a strong labour market despite COVID-19 surge. URL: https://financedigest.com/u-s-labor-market-powers-ahead-as-weekly-jobless-claims-fall-layoffs-hit-24-year-lowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-09-02t142417z3lynxmpeh810ljrtroptp4usa-economy-1736837944776-compressed.jpg) By Lucia Mutikani WASHINGTON (Reuters) – The number of Americans filing new claims for jobless benefits fell last week, while layoffs dropped to their lowest level in more than 24 years in August, suggesting the labor market was charging ahead even as new COVID-19 infections surge. The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed the number of people on state unemployment rolls tumbling to a 17-month low in the third week of August. Declining layoffs should help to [ease concerns about the economy](https://www.financedigest.com/china-steps-up-easing-cuts-lending-benchmarks-to-revive-faltering-economy.html "China steps up easing, cuts lending benchmarks to revive faltering economy") even if August’s closely watched employment report on Friday shows a slowdown in nonfarm payrolls growth. Regardless of tomorrow’s report, keep in mind that the weekly jobless figures say the labor [market screws continue](https://www.financedigest.com/uk-housing-market-weakness-continues-improvement-on-the-horizon-rics.html "UK housing market weakness continues, improvement on the horizon – RICS") to tighten,” said Chris Rupkey, chief economist at FWDBONDS in New York. “There is no sign that the Delta variant is leading to job losses across the country.” Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 340,000 for the week ended Aug. 28, the lowest level since mid-March 2020 when mandatory closures of nonessential businesses were enforced to slow the first wave of [coronavirus cases](https://www.financedigest.com/u-s-coronavirus-cases-hit-new-high-hospitalizations-creep-up.html "U.S. coronavirus cases hit new high, hospitalizations creep up"). There were notable declines in applications in California, Illinois and Virginia, while Ohio and Missouri reported big increases. Economists [polled by Reuters](https://www.financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-poll.html "Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll") had forecast 345,000 applications for the latest week. Claims have dropped from a [record 6.149 million](https://www.financedigest.com/ireland-fines-instagram-a-record-400-million-over-childrens-data.html "Ireland fines Instagram a record 0 million over children’s data") in early April 2020. They, however, remain above the 200,000-250,000 range viewed as consistent with healthy labor [market conditions](https://www.financedigest.com/opec-meeting-to-take-into-account-market-conditions-iraqi-official.html "OPEC+ meeting to take into account market conditions – Iraqi official"). The latest wave of COVID-19 cases, driven by the Delta variant of the coronavirus, and an acute shortage of workers have left some economists expecting moderate job gains in August. Labor [market indicators](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") last month were mixed, with a measure of factory employment contracting and private payrolls undershooting expectations. But hiring by [small businesses accelerated and consumers’ views of the labor market](https://www.financedigest.com/ge-healthcare-rises-8-in-market-debut-eyes-small-deals.html "GE HealthCare rises 8% in market debut, eyes small deals") remained fairly upbeat. [Stocks on Wall Street were trading higher](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease"), with the S&P 500 index touching a record high. The [dollar slipped against a basket of currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"). U.S. [Treasury prices](https://www.financedigest.com/stocks-jump-as-treasury-yields-ease-and-oil-prices-sell-off.html "Stocks jump as Treasury yields ease and oil prices sell off") were mixed. WORKER SHORTAGES While last week’s claims [data has no bearing on August’s employment report as it falls](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") outside the survey period, applications trended lower last month. The claims [report showed the number of people continuing](https://www.financedigest.com/ils-investment-returns-continue-to-outperform-according-to-aon-insurance-linked-securities-report.html "ILS investment returns continue to outperform, according to Aon insurance-linked securities report") to receive benefits after an initial week of aid plunged 160,000 to 2.748 million in the week ended Aug. 21, the lowest level since mid-March 2020. According to a Reuters survey of economists, nonfarm [payrolls likely increased by 750,000 jobs last month after rising](https://www.financedigest.com/instant-view-us-may-payrolls-rise-up-than-expected.html "Instant View: US May payrolls rise up than expected") by 943,000 in July. We expect the jobs report to show that the [economy](https://www.financedigest.com/younger-chinese-are-spurning-factory-jobs-that-power-the-economy.html "Younger Chinese are spurning factory jobs that power the economy") continued to add jobs at a rapid pace in August, defying COVID-19 Delta variant outbreaks across the country,” said Julia Pollak, chief economist at ZipRecruiter. That optimism was underscored by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing [job cuts](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") announced by U.S.-based employers decreased 17% to 15,723 in August, the [lowest number since June](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") 1997\. So far this year, employers have announced 247,326 [job cuts](https://www.financedigest.com/telecom-italia-in-talks-with-unions-on-up-to-2000-job-cuts-in-italy.html "Telecom Italia in talks with unions on up to 2,000 job cuts in Italy"), down 87% compared to the same period last year. The pandemic has upended labor market dynamics, creating worker shortages even as 8.7 million people are officially unemployed. There were a record 10.1 million [job openings at the end](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") of June. Lack of affordable childcare, fears of contracting the coronavirus, generous unemployment benefits [funded by the federal government as well as pandemic-related retirements and career changes](https://www.financedigest.com/hungary-pledges-legal-changes-to-secure-eu-recovery-funding-govt.html "Hungary pledges legal changes to secure EU recovery funding – govt") have been blamed for the disconnect. The labor crunch is [expected to ease](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") starting in September. The government-funded unemployment benefits lapse on Sept. 6 and schools are reopening for in-person learning. But soaring COVID-19 cases could cause reluctance among some people to return to the labor force. The [claims report showed about 12.2 million](https://www.financedigest.com/philips-subsidiary-to-pay-over-24-million-for-alleged-false-claims-for-medical-equipment.html "Philips subsidiary to pay over million for alleged false claims for medical equipment") people were receiving benefits under all programs in mid-August. This number is expected to drop sharply after next Monday’s expiration of government programs, which will affect about 7.5 million people. About 25 [states led by Republican governors terminated the expanded benefits several months](https://www.financedigest.com/inflation-in-key-german-states-eases-for-second-month.html "Inflation in key German states eases for second month") ago. Those [steps did not lead to an increase in hiring](https://www.financedigest.com/5-steps-hiring-top-talent-youre-just-start.html "5 steps to hiring top talent when you’re just a start-up "), leaving some economists to caution against expectations for an increase in the labor pool. Many states already have ended the programs [ahead of the federal expiration but so far we have yet to see](https://www.financedigest.com/italys-mps-sees-safe-habour-ahead-after-strong-quarter.html "Italy’s MPS sees ‘safe habour’ ahead after strong quarter") clear changes associated with the ends of these programs in many of the different variables we have studied,” said Daniel Silver, an economist at JPMorgan in New York. The labor market recovery is gaining steam [despite a slowdown in economic](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") activity caused by the latest coronavirus wave, fading fiscal stimulus and supply constraints. As a result of the expiration of the expanded benefits, weekly unemployment checks for nearly 3.0 million people will be reduced by $300, which economists [say will hurt consumer](https://www.financedigest.com/citigroup-says-will-close-russian-consumer-commercial-business.html "Citigroup says will close Russian consumer, commercial business") spending. But the moderation in growth is likely to be mitigated by a shrinking trade deficit. The trade gap narrowed 4.3% to $70.1 billion in July, the Commerce Department said in a separate report on Thursday. Economists have sharply marked down their gross domestic product estimates for the [third quarter to a low as a 2.9% annualized rate](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows") from as high as a 9% pace. The [economy grew](https://www.financedigest.com/turkeys-economy-grew-7-6-in-q2-driven-by-domestic-demand-exports.html "Turkey’s economy grew 7.6% in Q2 driven by domestic demand, exports") at a 6.6% rate in the second quarter. The slowdown is not broad-based and primarily reflects payback from stimulus spending and ongoing [supply issues,”](https://www.financedigest.com/gsk-expects-us-launch-of-rsv-vaccine-with-no-supply-issues.html "GSK expects US launch of RSV vaccine with no supply issues") said Ellen Zentner, chief U.S. economist at Morgan Stanley in New York. (Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Paul Simao and Andrea Ricci) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---