Jobless claims drop to pandemic era low

New weekly jobless claims plunged to a pandemic-era low after last week’s unexpected jump, with the labor market’s choppy recovery closely following the trajectory of new COVID-19 infections.

The Department of Labor released its weekly report on new jobless claims on Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg.

Initial unemployment claims were expected to hold at or above the 700,000 level for a third consecutive week, remaining close to levels from November.

Instead, new claims unexpectedly broke below the Great Recession-era high of 665,000 new claims filed in March 2009 for the first time in more than a year.

Prior to Thursday, the recent batch of greater-than-expected new jobless claims contrasted with the improving trend in other U.S. labor market data reported as of late. Though the latest jobless claims print fell far more than expected, the prior week’s new claims were revised up further to 769,000, from the 744,000 previously reported.

Yet March payrolls rose by a whopping 916,000, and employment indexes in the Institute for Supply Management’s (ISM) manufacturing and services indexes each advanced in the latest prints.

According to JPMorgan Chase economist Michael Feroli, one reason for this could be that the additional $300 in weekly unemployment insurance offered through the latest COVID-19 relief package may be incentivizing more individuals to file. But not every first-time filer will actually be authorized to receive benefits, he added.

The number of claimants receiving unemployment benefits remains sharply elevated.

Continuing claims totaled more than 3.7 million in early April, compared to a weekly average of fewer than 1.8 million continuing claimants throughout 2019. And a staggering more than 18 million Americans were receiving benefits across all programs as of late March. That included more than 13 million Americans on the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation program, the latter of which offers extended benefits to those who have exhausted their regular state insurance.

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