- New weekly jobless claims fall to 787,000, the lowest since the start of the COVID-19 pandemic
- Continuing claims fall sharply, dropping 1 million
- Labor market remains tenuous, with some of the decline credited to workers exhausting their regular benefits and moving to an emergency compensation program
The number of new people filing jobless claims fell to its lowest point since the start of the COVID-19 pandemic, falling 55,000 from the previous week’s downwardly revised figure of 842,000, with economists welcoming the news as a sign of an improving labor market. However, the recovery could prove short-lived, and part of the trend reflects an increasing number of people who are exhausting their unemployment benefits.
New claims for the week ending Oct. 3 fell to 787,000, the lowest since March 14 – three days after the World Health Organization declared a pandemic – when new claims stood at 282,000. Continuing claims dropped 1 million to 8.4 million, with the unemployment rate standing at 7.9 percent.
The drop in unemployment applications was partially driven by a sharp decline in California, which recently stopped accepting claims for two weeks to update its processing system and address a backlog. Some economists have also questioned whether overall unemployment figures are lower due to fraud or states double-counting those applying in their regular program as well as the Pandemic Unemployment Assistance program that offers aid to self-employed and gig workers.
The decline in continuing claims reflects a return of workers to their previous jobs or new ones, though it is also a result of more people exhausting their unemployment benefits. The number of recipients under the Pandemic Emergency Unemployment Compensation program, which provides 13 additional weeks of emergency compensation, increased by more than half a million. The number of recipients in this program has nearly tripled since August.
There are also concerns that a number of factors may stall the economic recovery. These include an uptick in COVID-19 infections that could spur new lockdowns or restrictions, slow progress in Congress on a new economic stimulus package, signals from several companies that they will need to implement layoffs without further assistance or improved conditions, and seasonal factors such as colder weather making it more difficult for restaurants to offer outdoor dining.
