MACRO: US jobless claims continue to fall as some states end federal aid

Today's report from the Labor Department showed that initial jobless claims decreased to 444k in the week ended May 15th, from a total of 478k the previous week, which was revised upward by 5k. Today's data came in below market estimates of 450k and claims reached the lowest level since March 2020, when the pandemic first hit the US economy. 

The number of  initial jobless claims fell to a new post-pandemic low last week. For the same period a year ago, claims totaled more than 2.3 million. Source: US Department of Labour

However, the number of continuing claims unexpectedly increased by 111k to a seven-week high of 3.75 million while analysts expected a decrease to 3.64 million. 

Continuing claims increased unexpectedly. Source: Bloomberg

The broadest measure of all those claiming unemployment-related benefits fell by some 900k to 15.975 million of which about 11.7 million receives support from federal unemployment benefit programs. 

Number of Americans on some form of jobless benefits still remains high. Source: Bloomberg via ZeroHedge.

However the number of claims may decrease further in the near future as at least 21 states - all with Republican governors -have recently announced plans to withdraw from federal government's supplemental unemployment benefits program which provides an extra $300 a week to the jobless. This will take place in June according to an Associated Press. About 3.5 million people will see their benefits reduced in the coming months, according to Oxford Economics. Businesses are saying that it is more difficult for them to find workers as the unemployment benefits pay more than most minimum wage jobs. In turn, a lower number of claims may actually trigger some Fed's reaction, whose officials have consistently argued that they should not withdraw monetary stimulus until the labor market has made "substantial progress".