Unemployment claims hold steady as economy regains footing
The number of Americans filing first-time claims for unemployment benefits edged up last week to 373,000, the Department of Labor said on Thursday. That figure is little changed from last week's revised claims total of 371,000, a sign the labor market remains steady as layoffs slow.
Economists had expected first-time jobless claims for the week ended July 3 to fall to about 350,000. While the number of people filing for jobless aid was higher than expected, the overall trend has shown a marked decline as the economy regains its footing and employers rehire workers.
With vaccinations against COVID-19 continuing across the U.S., Americans are resuming their pre-pandemic behavior — traveling, shopping and eating out — and sparking demand for workers across multiple industries.
Economist Ian Shepherdson of Pantheon Macroeconomics thinks the uptick in workers applying for jobless benefits is due largely to seasonal factors, including automakers annual factory shutdown for retooling.
Longer term, jobless claims are declining, he told investors in a report. "Laying off staff now is risky because if business turns out to be better than expected, re-hiring people will be difficult and likely expensive, given the tightness of the labor market," he said.
Still, the economy will take time to heal fully, while labor demand and supply could be "bumpy" in the second half of 2021, according to Oxford Economics lead U.S. economist Lydia Boussour.
"While we foresee a stellar labor market performance this year with the economy expected to recoup a total of 8 million jobs, the return to a pre-COVID environment won't happen overnight," she wrote in a research note ahead of the latest claims number.