US unemployment claims plunge to lowest level since 1969

Figure signals return to pre-pandemic levels, but US still has 4 million workers less than February 2020

Applications for state unemployment benefits plunged to levels not seen since 1969, according to the latest figures from the US Department of Labor.

In the week ending November 20, the advance figure for seasonally adjusted initial claims was 199,000, a decrease of 71,000 from the previous week’s revised level.

This not only marks a return to pre-Covid-19 pandemic levels of claims, but it is also the lowest level of initial claims since 15 November 1969 when it was 197,000.

A Bloomberg survey of economists produced a median estimate of 260,000 applications.

However, seasonal adjustments around the Thanksgiving holiday contributed significantly to the bigger-than-expected drop. Unadjusted figures show claims actually ticked up by more than 18,000 to nearly 259,000.

The four-week average of claims, which smooths out weekly ups and downs, also fell — by 21,000 to just over 252,000, the lowest since mid-March 2020 when the pandemic slammed the economy.

Since topping 900,000 in early January, the number of applications has fallen steadily toward and now fallen below their pre-pandemic level of around 220,000 a week. Claims for jobless aid are a proxy for layoffs.

Overall, 2 million Americans were collecting traditional unemployment checks the week that ended 13 November, down slightly from the week before.

If claims are sustained at pre-pandemic levels, it would likely increase the chance that Federal Reserve officials accelerate their tapering of bond purchases and contemplate raising interest rates soon after that buying finishes in 2022.

The data follow reports showing the fastest inflation in three decades and a pickup in job gains in October, which have added to calls to accelerate this process.

In a statement released by the White House on Wednesday, President Joe Biden said: “Last year, there were 21 million unemployment insurance claims before the Thanksgiving holiday. Today, there were 2.4 million. This is a historic jobs recovery: 5.6 million jobs created since I took office and an unemployment rate of 4.6 per cent – two full years earlier than experts predicted was possible.”

He added: “More Americans are getting back to work and more Americans have money in their pockets, thanks to the American Rescue Plan and the vaccination campaign.”

While the job market has staged a remarkable comeback since the early shutdowns of spring of 2020 kept many Americans at home as a health precaution. In March and April of that year, employers slashed more than 22 million jobs.

Including the federal programs, the number of Americans receiving some form of jobless aid peaked at more than 33 million in June 2020.

The federal government withdrew the $300 per week supplemental support to state unemployment insurance programs in early September.

While the October jobs report showed payrolls increased by 531,000, and economists predict another 575,000 to be added in November, millions of Americans are still choosing to not return to work.

There have been 18 million new hires since the beginning of the pandemic, but the US is still 4 million jobs short of the number it had in February 2020.

Frustrated employers, coping with a surge in consumer demand, are desperate to fill positions and continue to offer incentives and more flexible working arrangements to try and entice people back to work.

Workers, finding themselves with bargaining clout for the first time in decades, are becoming choosier about jobs.

There were a near-record 10.4 million job openings in September and a record 4.4 million people quit in the same month, continuing the “Great Resignation” trend at levels that have been ongoing since April.

New hire figures for November are expected on 3 December and will reveal whether people are returning to employment, if employer tactics are working, or whether the uptick in Covid cases in recent weeks is once again keeping people at home.

With reporting from the Associated Press