# U.S. weekly jobless claims fall; layoffs lowest in more than 21 years
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-08-05
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Americans' unemployment benefits drop as layoffs hit
Meta Description: Learn about the latest decrease in Americans filing for unemployment benefits and its impact on the labour market recovery amid rising COVID-19 cases.
URL: https://financedigest.com/u-s-weekly-jobless-claims-fall-layoffs-lowest-in-more-than-21-yearshtml

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By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits declined further last week, while layoffs dropped to their lowest level in just more than 21 years in July as companies held on to their workers amid a labor shortage.

Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 385,000 for the week ended July 31, the Labor Department said on Thursday. 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 384,000 applications for the latest week.

Claims largely moved sideways in July, with economists blaming California, which they said was stepping up [efforts to clear](https://www.financedigest.com/turkey-clears-away-rubble-from-earthquake-rescue-efforts-wind-down.html "Turkey clears away rubble from earthquake, rescue efforts wind down") its backlog of applications. That has helped to keep claims above their [pre-pandemic level](https://www.financedigest.com/marstons-says-q4-sales-above-pre-pandemic-levels.html "Marston’s says Q4 sales above pre-pandemic levels") of 256,000, though they have dropped from a record 6.149 million in early April 2020.

Nearly half of the population has been fully vaccinated against COVID-19, allowing people to travel, frequent restaurants, visit casinos and attend sporting events among services-related activities that were [curbed early](https://www.financedigest.com/french-sugar-makers-to-start-output-early-as-energy-curbs-loom.html "French sugar makers to start output early as energy curbs loom") in the pandemic. But [COVID-19 infections are surging](https://www.financedigest.com/stocks-on-worst-run-in-18-months-amid-global-covid-19-surge.html "Stocks on worst run in 18-months amid global COVID-19 surge"), driven by the Delta variant of the coronavirus.

While economists do not expect large-scale business shutdowns as what happened early in the pandemic, there are worries that rising [cases could slow the labor market recovery amid a shortage of workers](https://www.financedigest.com/amazon-loses-bid-to-throw-out-case-by-uk-drivers-seeking-worker-rights.html "Amazon loses bid to throw out case by UK drivers seeking worker rights"). There were a record 9.2 million [job openings as of 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 May. About 9.5 [million people](https://www.financedigest.com/the-start-up-using-technology-to-help-the-20-million-people-in-britain-with-money-worries.html "The start-up using technology to help the 20 million people in Britain with money worries") are officially unemployed.

The [economy fully recovered in the second quarter the sharp loss in output suffered](https://www.financedigest.com/uk-factories-suffer-worst-month-since-may-2020-as-economy-stumbles-pmi.html "UK factories suffer worst month since May 2020 as economy stumbles – PMI") during the very brief pandemic recession.

The elephant in the room is the Delta variant,” said James McCann, deputy [chief economist](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says") at Aberdeen Standard Investments in Boston. It has not prompted major changes in public [health restrictions yet but it could make some people nervous about going back](https://www.financedigest.com/occupational-health-and-safety-must-be-brought-back-to-the-forefront-of-esg.html "Occupational Health and Safety must be brought back to the forefront of ESG") to work, especially in those states in which vaccine hesitancy has held back progress.

EYES ON JULY PAYROLLS

The claims data has no bearing on the department’s closely watched employment report for July, due for release on Friday, as it [falls outside the survey](https://www.financedigest.com/ecb-survey-shows-rising-inflation-expectations-despite-energy-price-falls.html "ECB survey shows rising inflation expectations despite energy price falls") period. According to a Reuters survey of economists, [nonfarm payrolls](https://www.financedigest.com/dollar-tumbles-as-u-s-nonfarm-payrolls-show-mixed-picture.html "Dollar tumbles as U.S. nonfarm payrolls show mixed picture") likely increased by 880,000 jobs in July. The economy [created 850,000 jobs](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") in June.

July’s nonfarm payrolls estimate is highly uncertain, with [labor market](https://www.financedigest.com/u-s-labor-market-powers-ahead-as-weekly-jobless-claims-fall-layoffs-hit-24-year-low.html "U.S. labor market powers ahead as weekly jobless claims fall, layoffs hit 24-year low") indicators mixed. In a separate report on Thursday, global outplacement firm Challenger, Gray & Christmas said [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 fell 7.5% to 18,942 in July, the [lowest since in June](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") 2000\. So far this year, employers have announced 231,603 [job cuts](https://www.financedigest.com/inpost-sees-better-margin-in-poland-plans-no-job-cuts-this-year.html "InPost sees better margin in Poland, plans no job cuts this year"), down 87.5% compared to the same period last year. But the pace is slowing.

“In a healthy economy, there’s a good amount of churn. Right now, [things appear to be stalling,” said Andrew Challenger](https://www.financedigest.com/three-things-to-ask-your-management-team-and-accounts-payable-vendor-to-overcome-your-ap-challenges.html "Three things to ask your management team and accounts payable vendor to overcome your AP challenges"), senior vice President at Challenger, Gray & Christmas. “The positions and workers are not connecting.”

Data from Homebase, a payroll scheduling and tracking company, showed its [employees working](https://www.financedigest.com/how-to-protect-your-employees-mental-health-while-remote-working.html "How to protect your employees’ mental health while remote working") index rose moderately in July from June. The ADP Employment [report on Wednesday showed the smallest private payrolls gain](https://www.financedigest.com/tsg6-antibody-market-expansion-projected-to-gain-an-uptick-during-2021-2031-fact-mr-report.html "TSG6 Antibody Market Expansion Projected to Gain an Uptick during 2021-2031: Fact.MR Report") in five months in July.

That was, however, countered by two Institute for Supply Management surveys showing a rebound in [manufacturing and services industries employment last month](https://www.financedigest.com/spanish-manufacturing-output-down-for-6th-straight-month-in-dec-pmi.html "Spanish manufacturing output down for 6th straight month in Dec -PMI"). The Conference Board’s labor market differential, derived from [data on consumers’ views on whether jobs](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") are plentiful or hard to get, in July hit its highest level since 2000.

(Reporting By Lucia Mutikani; Editing by Dan Burns)


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