MACRO: Continuing jobless claims hit pandemic-era low

Weekly jobless claims declined further last week meeting Wall Street expectations, while longer-term unemployment signs showed improvement, the Labor Department reported today. The number of Americans filing new claims for unemployment benefits fell to 385k and broadly in line with analysts' estimates of 384 k. The latest reading points to a progressive labor market recovery from last year but remaining still markedly elevated compared to their 2019 weekly average of just over 200 thousand. Many companies struggle to hire employees as enhanced unemployment benefits, ongoing child care responsibilities and health concerns may discourage some workers to find a job. Meanwhile continuing jobless claims, which measure unemployed people who have been receiving unemployment benefits for a longer period of time, reached a fresh pandemic low of 2.930 million in the week ending July 24th, from a revised 3.296 million a week before and well below market expectations of 3.260 million.  according to U.S. Department of Labor 

Jobless claims fell to 385k in the week ending July 31st, the lowest level in a month while continuing jobless claims reached the lowest level since the pandemic began. Source: Bloomberg via ZeroHedge

Also the number of US citizens who are receiving benefits under all programs dropped below 13 million, a reduction of 181,251, according to data through July 17 that reflected a drop in those receiving extended benefits. In the same period a year ago, that number was slightly below 32 million as enhanced unemployment benefits were directed to those worst affected by government lockdowns. Many analysts expect this number to decline in the coming weeks as federal enhanced unemployment benefits will officially expiry in September.

The total number of people receiving some kind of unemployment benefit returned below 13 million. Source: Bloomberg via ZeroHedge

Today's claims numbers come a day ahead of the closely watched July nonfarm payrolls report from the Bureau of Labor Statistics and cast a bit of moderate optimism on the US labor market recovery. However last week's jobless claims numbers will not be included into the nonfarm payrolls count. Nevertheless much will depend on the government's approach to the spread of the Delta variant over the coming months. At the moment no major changes in the health restrictions have been implemented besides the mask mandate in some areas, however some Americans already feel nervous about going back to work. If the authorities decide to introduce much more severe restrictions, the number of claims may start to increase again.