Economic Report: Unemployment claims fall to new pandemic low of 406,000 as layoffs wane

Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would fall to a seasonally adjusted 425,000.

New requests for compensation are down sharply from just over 900,000 in early January. At one point they had soared to as high as 6.9 million in one week alone.

The number of new applications had been running in the low 200,000s before the viral outbreak last year.

Read: Why aren’t Americans happier about the economy? They are paying higher prices for almost everything

Big picture: Job openings recently surged to a record high and companies say they want to hire more workers because of surging demand for their goods and services.

Yet many also complain generous unemployment benefits have discouraged people from taking jobs, an argument that has persuaded almost half of the U.S. states to end extra federal payouts starting in late June.

Read: A jobs report whodunit: The prime suspects for weak hiring gains in April

Supporters of the extra benefits counter that many people, particularly women, are still stuck having to care for children or elderly parents because of the pandemic. They warn cutting off benefits will cause more hardship and slow the recovery.

Which side is right won’t be known until the end of July at the earliest.

Whatever the case, the U.S. economy still has enough momentum to ensure fairly strong growth over the summer, analysts say.

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 tens of billions of dollars in improper payments, a Labor Department review estimated.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.03%
and S&P 500
SPX,
+0.19%
were set to open mixed in Thursday trades.