The employment picture in the US improved a lot last week. For the first time since the pandemic crisis, unemployment insurance claims have fallen below 500,000 for the first time.
Initial claims for the week ended May 1 were 498,000, compared to the Dow Jones estimate of 527,000. That was a decrease from the previous week’s total of 590,000, which saw an upward revision of the originally reported 553,000 significantly.
While the labor market has a long way to go before it is fully healed of the pandemic damage, the improvement has accelerated in recent weeks as activity restrictions continue to be lifted.
Although the pace has slowed recently, the US is still vaccinating more than 2 million people a day and will soon have half the population with at least one shot.
The drop in claims comes a day before the Department of Labor releases its April non-agricultural payroll. Economists believe the economy created an additional 1 million jobs during the month, with the hiring likely the fastest in the hospitality industry, which has suffered the worst of the damage caused by pandemics.
However, the ongoing claims actually rose last week, climbing 37,000 to just under 3.7 million. The four-week moving average for claims fell to 3.68 million, the lowest since March 28, 2020 when mass layoffs began to fight the spreading coronavirus.
“While forecasts predict a return to pre-pandemic employment in two years, job gains are now skyrocketing financial strain and poverty, and that strong trend should continue at least into the summer,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Last week’s numbers suggest stronger labor market growth, but they are not included in the non-farm workforce because they fall outside of the survey week the Bureau of Labor Statistics uses to produce its estimate.
At the state level, only Kentucky saw a notable increase, with its claims rising by 4,657 according to unadjusted numbers. Virginia (-23,909), Florida (-9,662), and California (-7,402) were among the states that saw significant declines.
The total number of beneficiaries fell by 404,509 to 16.16 million due to a sharp decline in pandemic programs.
A separate economic report showed that non-farm labor productivity rose 5.4% in the first quarter, well above the Dow Jones estimate of 4.5%, according to the Bureau of Labor Statistics. Unit labor costs fell 0.3%, which was not in line with the 1% forecast.
Correction: The total number of unemployment claims was for the week ending May 1st. An incorrect date was displayed in an earlier version.
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