Economic Report: Jobless claims fall to pandemic low of 290,000 as businesses try to avoid layoffs due to labor shortage
The numbers: The number of people who recently lost jobs and applied for unemployment benefits fell again in mid-October to a new pandemic low, as companies shied away from layoffs amid the biggest labor shortage in decades.
New jobless claims dropped by 6,000 to 290,000 in the seven days ended Oct. 16, the government said Thursday.
Economists polled by The Wall Street Journal had estimated new claims would total a seasonally adjusted 300,000.
Last week new claims dropped below the key 300,000 level for the first time since the start of the viral outbreak in March 2020. New claims were in the low 200,000s before the pandemic.
Companies are trying to avoid layoffs in light of a major labor shortage that’s hurting production and cramping the U.S. economy. Another government employment measure show layoffs are at the lowest level on record.
Read: Fed finds labor and supply shortages are hurting the U.S. economy
Millions of open jobs have gone left unfilled even with unemployment still relatively high compared to pre-pandemic levels.
Read: ‘My business faces a dire shortage of workers,’ owner tells Congress
Big picture: The U.S. economy faces a surprising labor shortage even though as many as 14 million people who say they want to work are still unemployed.
Read: When will the labor force’s ‘missing millions’ return? And where are they?
With millions of jobs going unfilled, businesses can’t expand fast enough or produce enough goods and services to meet rising customer demand.
The labor shortage threatens to slow the economy, economists and business leaders say, and prolong bottlenecks in the supply chain that are triggering the biggest burst of inflation in 30 years.
Read: Inflation rises at 5.4% yearly pace in September and stays at 30-year high
Key details:New jobless claims fell the most last week in Virginia, Pennsylvania and Michigan.
The only state to post a big increase was California. The state has struggled to process a backlog of claims and weed out fraud. It has consistently shown a much higher level of new jobless claims relative to the size of its workforce compared to other states.
The number of people already collecting state jobless benefits, meanwhile, declined by 122,000 to 2.48 million. These so-called continuing claims are at a pandemic low.
Altogether, 3.28 million people were reportedly receiving jobless benefits through eight separate state or federal programs as of Oct 2. The figures are released with a two-week delay.
Some 11.3 million people had been getting benefits before the expiration in September of an emergency federal program set up during the pandemic to make extra payments to the unemployed.
Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open lower in Thursday trades.