The number of Americans filing new claims for unemployment benefits fell more than expected last week, while layoffs plunged to a 21-year low in June as companies held on to their workers amid labor shortages.
Initial claims for state unemployment benefits dropped 51,000 to a seasonally adjusted 364,000 for the week ended June 26, the Labor Department said on Thursday.
But the pace of decline has moderated from May, when claims dropped below 400,000 for the first time since March 2020, when mandatory shutdowns of nonessential businesses were enforced to slow the first wave of COVID-19 infections.
Claims increased in mid-June, interrupting a stretch of six straight weekly decreases.
Claims have dropped from a record 6.149 million in early April 2020, but are still above the 200,000-250,000 range that is viewed as consistent with a healthy labor market.
Some of the recent elevation in claims has been blamed on the so-called seasonal factor, which the government uses to iron out seasonal fluctuations from the data.
The claims data could become noisy in the weeks ahead as 26 states with mostly Republican governors pull out of federal government-funded unemployment programs, including a $300 weekly check, which businesses complained were encouraging the jobless to stay at home.
The early termination began on June 5 and will run through July 31, when Louisiana, the only one of those states with a Democratic governor, ends the weekly check.
For the rest of the country, these benefits will lapse on Sept. 6. There is no evidence so far of a surge in job searches in the 20 states that have already ended the federal benefits.
A survey this week by job search engine Indeed here found that while the vast majority of the unemployed indicated they would like to start looking for work in the next three months, many did not express a sense of urgency.
But rising vaccinations, dwindling savings and the opening of schools in the fall will be key to pulling them back into the labor force.