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(Reuters) – WASHINGTON, July 1 (Reuters) – Last week, the number of Americans submitting new unemployment claims decreased more than predicted, while layoffs hit a 21-year low in June, indicating that the labor market’s recovery from the COVID-19 epidemic was gaining steam. While job cuts are reducing, a scarcity of willing workers is limiting hiring in the wake of the economy’s recovery, made possible by coronavirus vaccinations. Nonetheless, the reports issued on Thursday bode well for the much-anticipated June employment report, which is set to be announced on Friday. “America is back to work, and despite a hiccup at the beginning of June, new claims have dropped below the 400,000 level,” said Chris Rupkey, chief economist at FWDBONDS in New York. “Every year, summer is the busiest hiring season, and this year is no different.” The Labor Department reported that initial claims for state unemployment benefits fell 51,000 to a seasonally adjusted 364,000 for the week ending June 26. That was the lowest number since March 2020, when the first wave of COVID-19 infections was slowed by obligatory shutdowns of non-essential companies. The previous week’s data was updated to reveal that 4,000 more applications were received than previously stated. In mid-June, it looked that the improvement in claims had come to a halt. Despite being above the 200,000-250,000 range associated with a robust labor market, claims have fallen from a high of 6.149 million in early April 2020. Reuters polled economists, who predicted 390,000 applications for the most recent week. In Pennsylvania, there was a significant drop in filings, reversing the previous week’s spike. The state modernized its filing system last month, and the changeover could be generating data instability. California, Kentucky, and Texas also saw significant drops in claims. In the coming weeks, the claims statistics might get noisier as 25 states, primarily led by Republican governors, withdraw from federally sponsored unemployment programs, including a $300 weekly check, which companies said was encouraging the unemployed to stay at home. The early termination started on June 5 and will go until July 31, when Louisiana, the only state with a Democratic governor, will terminate the weekly check. These advantages will expire on September 6 for the remainder of the country. In the 20 states that have already terminated federal payments, there has been little evidence of an increase in job searches. While the vast majority of the unemployed said they would like to start looking for employment in the next three months, many did not express a feeling of urgency, according to a survey released this week by job search engine Indeed. However, rising vaccination costs, depleting funds, and the start of school in the autumn will all play a role in re-engaging them in the workforce. According to the claims report, the number of people receiving benefits after an initial week of assistance increased by 56,000 to 3.469 million in the week ending June 19. In mid-June, 14.7 million people were getting benefits from all programs, down from 14.8 million earlier in the month. “It remains to be seen whether an early termination of assistance measures will result in significantly faster employment creation,” said Rubeela Farooqi, chief US economist at White Plains-based High Frequency Economics. In early trade, stocks in the United States were mixed. The dollar fell against a basket of currencies (.DXY). Treasury prices in the United States have dropped. SHORTAGE OF WORKERS Workers, especially women, have been accused for staying at home due to a lack of cheap child care and fears of acquiring the coronavirus. At the end of April, there were a record 9.3 million job opportunities, and 9.3 million people were officially unemployed in May. Pandemic-related restrictions on companies and mask demands have been eased now that at least 150 million Americans have been completely inoculated against the virus. The reopening of the economy has resulted in a surge in demand, leaving firms in desperate need of employees. Job losses reported by U.S.-based firms fell 16.7% to 20,476 in June, the lowest level since June 2000, according to a second survey released on Thursday by global outplacement agency Challenger, Gray & Christmas. In June 2020, there were 88 percent fewer layoffs than in June 2020. In the second quarter, 67,975 jobs were lost, the fewest since the April-June period of 1997. Layoffs fell 87 percent in the first half of this year, to 212,661, the lowest figure for the January-June period since 1995. “The rubber band is snapping back,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said. “Companies are clinging on their employees at a time when job opportunities are at an all-time high and job seekers’ confidence is at an all-time high. Since the Dot-Com boom, we haven’t seen job cuts this low.” According to a Reuters poll of experts, nonfarm payrolls are expected to rise by 700,000 jobs in June, following a 559,000 increase in May. The unemployment rate is expected to fall to 5.7 percent this month, down from 5.8 percent the previous month. The Conference Board announced on Tuesday that the so-called labor market differential in its consumer confidence survey, which is generated from data on respondents’ perceptions on whether jobs are plentiful or difficult to come by, jumped to its highest level since 2000 in June. Last month, private firms employed more workers than planned. find out more Lucia Mutikani contributed reporting.
Paul Simao edited the piece.
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