The U.S. unemployment picture improved again last week, with initial filings for unemployment insurance falling to another pandemic-era low.
First-time claims dropped to 269,000 for the week ended Oct. 30, down 14,000 from the previous period and better than the Dow Jones estimate for 275,000, the Labor Department reported Thursday.
The decline in filings comes amid a rollback in special programs initiated during the crisis, with the total of those receiving benefits under all programs dropping another 157,731 to 2.67 million.
As the jobs picture clears up, the four-week moving average for claims, which helps smooth weekly volatility, fell 15,000 to 284,750. A year ago, the average was 791,000, and it was 225,500 in March 2020 just before the Covid pandemic declaration sent more than 20 million Americans to the unemployment line.
Continuing claims, which run a week behind the headline number, declined 134,000 to just over 2.1 million.
All of the jobless totals are the lowest since March 14, 2020.
“The fifth straight weekly drop in jobless claims, to a new pandemic low, is consistent with all the other evidence pointing to labor market tightness,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. “With demand reviving post-Delta, the bar for layoffs is high and rising. Claims appear to be on course to reach the pre-Covid level early next year.”
The claims report comes a day before the Labor Department’s closely watched nonfarm payrolls count, which is expected to show growth of 450,000 for October.
Though the most recent claims report falls outside the survey week the government uses for its official count, the declining total represents a jobs market healing from the pandemic abyss but also facing a series of unique obstacles.
American businesses have been hit with a chronic labor shortage that has caused a number of ills, including shorter hours, less product on shelves and escalating inflation. Responding in part to the rising price pressures, the Federal Reserve on Wednesday said it would begin reducing the amount of support it is providing for the economy by slowly tapering its monthly bond purchases.
In other economic news Thursday, U.S. productivity growth was worse than even the expected decline of 3.2%, falling 5% for the biggest quarterly drop since the second quarter of 1981, the Bureau of Labor Statistics reported.
At the same time, unit labor costs soared 8.3%, which is a combination of the productivity decline plus a 2.9% increase in hourly compensation. That increase was more than the 7.4% Dow Jones estimate.
“The biggest drop in productivity since 1981 is a consequence of the Delta Covid hit to growth, and it tells us nothing about the underlying trend,” Shepherdson said. “We remain optimistic that productivity growth will average 2%-plus over the next couple years, at least, as firms use some of their abundant resources to start rebuilding the capital stock, following a cycle in which businesses persistently under-invested.”
Also, the trade deficit for goods and services totaled $80.9 billion in September, an increase of $8.1 billion monthly and a fresh record. The growing shortfall came as the deficit with China increased by $3.4 billion, or 12%, and the shortfall with Mexico grew by $2.3 billion, or 35.4%.
