The number of Americans filing unemployment claims for the first time fell to 326,000 last week, the Department of Labor reported Thursday.
The number was below expectations of 350,000 and compares to a revised 364,000 in the previous week.
The four-week moving average was 344,000, an increase of 3,500 from the previous week’s revised 340,500.
Unemployment benefits have skyrocketed in recent weeks as the delta variant of the coronavirus forced companies to impose restrictions like social distancing, masking and vaccine requirements.
The reading is the second of three this week to measure labor health. On Wednesday, the private payroll company ADP announced that the employers surveyed had created 568,000 new jobs, which was above expectations. Official government measure of monthly employment growth will be presented by the Ministry of Labor on Friday. According to forecasts, after the disappointing 235,000 jobs in August, around 500,000 jobs will be created.
“Personally, I expect the number of jobs to be between 500,000 and 600,000 as expected,” wrote Brad McMillan, chief investment officer of the Commonwealth Financial Network, on Wednesday. “As long as the country stays open, the economic damage is muted and the medical damage is likely already done. I don’t expect this report to be real news.”
Meanwhile, companies continue to report difficulties filling the more than 11 million vacancies. And an American Staffing Association’s hiring demand index, which represents temporary employment agencies, hit its highest level since December 2018. Staff positions rose 26.7% from the week of the previous year, with 55% of recruitment agencies seeing an increase in temporary / contract work.
“There are no signs of an easing of the labor supply,” said Richrd Wahlquist, president and CEO of the association. He added that the theme was at the forefront of the organization’s recent meeting. “Problem # 1 is the lack of available talent across the spectrum.”
A variety of factors have contributed to the imbalance between supply and demand, including a resilient economy, fears of COVID-19, lack of childcare for job seekers, and demographic changes.
Most observers assume that the situation will only improve well into the next year or later, as more people are vaccinated against COVID-19 and the Delta variant fades as a health threat.
“The key question for the labor market is how persistent the withdrawal of workers from the labor market is,” wrote David Page, head of macroeconomic research at AXA IM, on Wednesday. “The participation is persistently low at around 61.8%. We doubt that this reflects unemployment benefits and therefore see only marginal gains from the phasing out of supplementary unemployment benefits beyond Labor Day. However, an improvement in the COVID situation and the reopening of schools should encourage “more people will return to the labor market in the coming quarters.”