The number of US citizens who filed new claims for uemployment benefits dramatically rose last week. Still, the increase downplays the Labor Market conditions, which increased rapidly as the economic activity across the country resumed were, and fiscal stimulus kicked.
The initial claims for the state unemployment allowance, which is seasonally adjusted, stood at 744,000 for this week ended April 3 compared to 728,000 in the previous week, the Labor Department said on Thursday. The economists surveyed by Reuters have estimated 680,000 applications in the past week.
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Last week, the government reported that the economy created 916,000 jobs in March, the most in seven months. Job openings increased to two years in February. However, the permanent work remained below 8.4 million jobs under its peak in February 2020.
The labor market has regained the footing after stumbling in December, thanks to a hefty $1.9 trillion pandemic rescue package and acceleration in coronavirus vaccination drive, allowing more businesses to continue operations.
In the minutes of the US Federal Reserve’s policy meeting was released on Wednesday, the central bank officials recognized the increase in Labor Market Conditions and “expected strong work profits to continue in the coming months.” Some Fed officials suggest that the latest aid packages “can accelerate recovery, which can help limit long-term damage in the labor market caused by a pandemic.”
Although claims have fallen from a record of 6.149 million in early April 2020, they are more than double their pre-pandemic levels. In a healthy labor market, shares are usually in the range of 200,000 to 250,000. Part of the claim’s height is due to fraud and backlog clogging the system after increasing the program of unemployment benefits.
The government pays a weekly $300 unemployment supplement and funding benefits for independent workers, gig workers, and other people who do not qualify for regular state unemployment insurance programs. Weekly subsidies and pandemic unemployment assistance programs will last until September 6.
“The total number of submissions for all unemployed insurance programs remains stable over the past few months even though net hires back in a monthly employment report,” said Veronica Clark, an economist in Citigroup in New York.
Anecdotal evidence suggests the companies recall the workers who were dismissed during the pandemic and recruiting new employees. On Monday, a supply management survey Institute showed the services business reporting that they “have recalled everyone put on waivers and making new hires” and have “additional employees added to serve new customer needs in new locations.”