Jobless claims fall below 500k, a sign that the labor market is picking up

Finally, the labor market has great news after a long struggle with the Covid-19 pandemic. Last week the unemployment insurance claims dropped below 500k, the lowest figure in this pandemic era.

These changes are believed to be fueled by the efforts the nation is putting in place to ease Covid-19 restrictions, the vaccination campaign, and the massive financial assistance from the government. Indeed, President Biden’s administration has ensured that over 2 million people are vaccinated every day, and as a result, residents aged 16 and above are able to get their vaccine shot.

In view of that, soon, the majority of Americans will have at least one shot. It’s also the reason why new Jersey, New York, and Connecticut have loosened their Covid-19 restrictions on businesses. Further, over the past year, the government a provided pandemic relief of approximately $6 trillion.

Jobless claims for the week ending May 1 was 498,000 below the previous week, which was 590,000. The country shut down all of the nonessential businesses to reduce the number of Covid-19 infections in the first wave. The hospitality sector was one of the worst-hit sectors, but economists are optimistic that it is recovering from the pandemic-related damages.

According to the Wednesday report, private employers hired more, and the services industry topped while the consumers’ perceptions towards the labor market was strongest in more than one year. Also, planned layoffs dropped by 84% compared to the same period last year.

Unfortunately, these changes will not appear in the nonfarm payrolls count because they fell outside the Bureau of Labor Statistics survey week. Some of the states that declared significant declines were California (-7,402), Florida (-9,662), Virginia (-23,909), while Kentucky’s claims rose by 4,657.

The Bureau of Labor Statistics will release April’s nonfarm report tomorrow, and economists estimate that the figure will range between 656,000 and 2.1 million jobs.

This is because employers are not likely to lay off extensively as they did in 2020; instead, the number of new job opportunities is growing. The jobless claims touched 6,149 million in April 2020, which was extremely high compared to the 200,000 to 250,000 in a healthy labor market.

Further, consumers are optimistic, ready to spend and travel, which is a positive sign of economic recovery.