Unemployment claims fell sharply last week despite severe winter storms in Texas and other parts of the south, the Department of Labor reported Thursday.
Initial jobless claims for the week ending February 20 totaled 730,000, well below the Dow Jones estimate of 845,000.
The total was also a significant decrease from 841,000 the previous week, a number that was down by 20,000.
Despite falling to its lowest level since November 28, it was still well above anything the U.S. labor market had seen before the Covid-19 pandemic.
Ongoing claims also fell, falling 101,000 to 4.42 million. This was the lowest level since March 21, but it was also much higher than the pre-pandemic norm.
The decline likely didn’t take into account those expected due to the storms.
“The sharp drop in unemployment claims is likely due to the fact that people in states hardest hit by last week’s big storm, particularly Texas, have better things to do than unemployment claims,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. “We expect a rebound next week. The trend seems to be roughly flat, but we continue to believe that exposures will soon decline slowly, slowly at first, then faster as the economy reopens in April and May accelerated. “”
Texas saw a drop of 7,433 for the week, according to unadjusted data. Other states with sharp declines were California (-50,130), Ohio (-46,259) and New York (-8,552).
The decline in the total number of unemployment claims masked ongoing pressures in the labor market.
Although the total decreased, the number of people who filed pandemic programs continued to rise, and just over 1 million additional pandemic emergency program claims were made, compensating those who have expired their regular benefits.
In total, just over 19 million Americans will be in compensation as of February 6, up more than 700,000 from the previous week.
However, recent data shows that entitlements are increasing under the Pandemic Unemployment Assistance Program, which offers benefits to those who would normally not be eligible. In the weeks February 13-20, more than 964,000 Americans signed up for the program.
Other Thursday morning economic reports showed that headline durable goods spending rose 3.4% and excluding transportation 1.4%, both well above Wall Street estimates.
The second reading of gross domestic product in the fourth quarter of 2020 also showed an increase of 4.1%, a tenth of a percentage point more than the original reading, but slightly below the Dow Jones estimate of 4.2%.
Comments are closed.