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The numbers: Applications for U.S. unemployment benefits fell last week to a fresh pandemic low, reflecting more aggressive efforts by companies to hire new workers amid a rapid economic recovery.
Initial jobless claims in the states dropped by 34,000 to 473,000 in the seven days ended May 8, the government said Thursday. It was the fifth decline in a row.
Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims to total a seasonally adjusted 500,000.
Businesses are trying to hire more people as the economy moves toward a full opening and consumers itch to satisfy cravings for many purchases they put off during the pandemic. Massive federal stimulus has put more cash in people’s pockets and dwindling coronavirus cases has given them the confidence to spend it.
Yet despite record job openings, the economy only created a paltry 266,000 new jobs in April. Wall Street had a forecast a much larger increase of 1 million.
Read: A jobs report whodunit: The prime suspects for weak hiring gains in April
Many firms complain they can’t find qualified workers and some blame generous government unemployment benefits for dissuading people from accepting a job. Another problem is lack of daycare options for parents in areas where schools are still closed.
Read: A record number of small businesses can’t find enough workers
Unemployment claims are still more than twice as high now compared to the last month before the pandemic began. The number of applications had been running in the low 200,000s before the viral outbreak early last year.
Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting. Widespread fraud has also resulted in at least $63 billion in improper payments, a Labor Department review estimated.
Big picture: No one predicted a potential labor shortage once the pandemic faded and the economy regained some sense of normalcy, but that’s the situation the U.S. could find itself in.
Layoffs are falling and should continue to decline over the summer, but how quickly people move from unemployment back into the workforce is less clear. Labor shortages could linger until the fall, when most schools are expected to be open and emergency unemployment benefits expire.
A full U.S. economic recovery might take longer if companies can’t find enough workers. Some have already had to scale back production because they lack the manpower.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open mixed in Thursday trades. Stocks sank on Wednesday after the rate of inflation rose to the highest level in 13 years.
