The numbers: Some 326,000 people who recently lost their jobs applied for unemployment benefits in early October, marking the first decline in a month and pointing to further improvement in the U.S. labor market. New jobless claims paid traditionally by the states fell by 38,000 in the seven days ended Oct. 2 from 364,000 in the prior week, the government said Thursday.
Economists polled by The Wall Street Journal had estimated new claims would drop to a seasonally adjusted 345,000. Before the most recent decline, new applications for jobless benefits had risen three weeks in a row, raising questions about whether the delta variant had forced more businesses to lay off workers. Yet most of the increase took place in California and suggested the problems were not widespread. The rest of the states have largely seen applications for unemployment benefits flatten out or decline over the past month. The number of people already collecting state jobless benefits, meanwhile, dropped by 98,000 to a seasonally adjusted 2.71 million. These so-called continuing claims are near a pandemic low. Altogether, some 4.17 million people were reportedly receiving jobless benefits through eight separate state or federal programs as of Sept. 18. That’s down sharply from 11.3 million at the start of the month, mostly because of the end of temporary federal program to help the unemployed. Read: The Fed has bet on a future of low inflation. Here’s what could go wrong Big picture: The number of people applying for unemployment benefits still hasn’t returned to pre-pandemic levels in the low 200,000s. But with record job openings and most companies trying to hire, layoffs are expected to continue to wane. The biggest problem with the U.S. jobs market right now is the reluctance of millions of people to return to the workforce. The return of children to school and the end of extra federal benefits is expected to nudge or encourage more of them to return to work in the near future. The critical U.S. employment report for September that comes out on Friday could shed light on whether more people are returning to the labor force. Wall Street economists predict job creation will more than doubled to around 500,000 from just 235,000 new jobs created in August. Read: Half of all small businesses can’t find enough workers to fill open jobs Key details: New jobless claims fell the most in California, where they declined by more than 10,000 based on unadjusted numbers. A surge in the Golden State over the past month accounted for much of the increase in overall U.S. jobless claims. California has been working through a large backlog of applications. It was also hit hard by delta. The effects of Hurricane Ida on states such as Louisiana and Texas was another contributor to higher U.S. claims. New jobless claims fell last week in 37 other states. About 1.3 million applications for jobless benefits were filed through federal programs that expired in the first week of September. Some of those claims likely reflect weeks of work missed before the federal program expired, but it’s unclear how many will be paid out. The federal program paid extra benefits to all jobless workers, including millions of self-employed who had never been eligible for compensation in the past. What they are saying? “Over the last few weeks, claims in California have consistently been higher than the other 49 states, but it looks like they fell back in line with the broader trend this week,” money market economist Thomas Simons of Jefferies LLC told clients in a note. Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open higher in Thursday trades.