Jobless Claims Drop to Another Pandemic Low

Worker filings for initial jobless claims have dropped by 35% since late April, slipping below 400,000 last week for the first time since the pandemic started.

Weekly unemployment claims, a proxy for layoffs, fell to 385,000 last week from a revised 405,000 the prior week, the Labor Department said on Thursday. Last week’s decline in claims marked the fifth straight week that new filings fell, from 590,000 in late April, adding to signs of a healing labor market as the U.S. economy ramps up.

Economists separately expect that the May employment report, set to be released Friday, will show that the economy added 671,000 jobs last month, after gaining 266,000 in April, and that the unemployment rate fell to 5.9% in May from 6.1% the prior month.

The steady decline in initial unemployment claims points to a budding economic expansion as rising vaccination rates quell Covid-19 case numbers and governments ease restrictions on businesses.

“We’ve heard a lot about workers being slow to rejoin the workforce and some reluctance to take the jobs that are available, but on the other side of that, the recovery is proceeding [and] layoffs are declining,” Nancy Vanden Houten, lead economist at Oxford Economics, said.

While initial claims have steadily decreased in recent weeks, the weekly totals remain twice what they were before the pandemic.

“But it’s still a significant amount of progress from where we were,” Ms. Vanden Houten said. “And in a short time too.”

There are numerous signs that demand for workers continues to pick up as the economy further reopens. As of late May, job postings on Indeed, a job-search site, were 26% above where they were ahead of the pandemic in February 2020, after adjusting for seasonal variation. Companies from across the economy report they are struggling to find workers. A manufacturing employment index of the Institute for Supply Management fell sharply in May, signaling that fewer businesses were adding to their head counts