New applications for US unemployment benefits fell to their lowest weekly level in more than five decades, as filings slowed heading into the Thanksgiving holiday and with business struggling to recruit staff amid labour shortages.
State unemployment offices received 199,000 initial jobless claims on a seasonally adjusted basis last week, down from 270,000 the previous week, according to the labour department. That brought jobless claims to their lowest level since November 1969, and compares with a previous low of 205,000 in February 2020.
Claims also slipped more than economists had anticipated, with an average estimate of 260,000 for the week.
“It is fair to say that we didn’t see that coming,” said Mark Hamrick, senior economic analyst at Bankrate.
“Americans head into the heart of the holiday season with a reasonable expectation that an already tight job market will continue to tighten in the months ahead,” he added.
Some economists cautioned against reading too much into the report, noting that last week’s unadjusted figure for initial claims rose by 18,000.
“The drastic drop in weekly jobless claims reeks of seasonal adjustment noise,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Especially with Covid-19 cases rising, a drop seven times the recent average seems highly unlikely.”
Joshua Shapiro, chief US economist at MFR, also said the decline “appears to be due to a big difficulty with seasonal adjustment”.
“This shift is due to the ‘expectation’ of the start of large seasonal lay-offs in construction employment as cold weather begins to envelop the northern tier of the country. However, with housing in great demand and the weather not yet having turned, this did not occur,” Shapiro added.
There were 2m Americans actively collecting benefits as of November 13, below the 2.1m continuing claims recorded a week earlier. Continuing claims remain above pre-pandemic levels of about 1.7m.
Lay-offs have slowed as employers struggle to hire staff and keep the workers they already have, with a record number of Americans quitting their jobs in a tight labour market.
Over the past four weeks, the US has averaged about 252,000 initial claims per week, down from 345,000 in early October.
A separate report from the Census Bureau on Wednesday said new orders for long-lasting goods such as cars and kitchen appliances fell 0.5 per cent in October from the previous month, as factories continued to wrestle with shortages of parts and labour. Unfilled durable goods orders were up 0.2 per cent in a sign of strong demand.
The US economy expanded at a 2.1 per cent annualised rate in the third quarter, up from an initial estimate of 2 per cent, according to an update from the Bureau of Economic Analysis. The revised figure reaffirmed that growth slowed sharply during the quarter, dragged down by supply chain bottlenecks.