The U.S. labor market approached its pre-pandemic self last week as initial jobless claims were only 406,000 for the week ending May 22, the Department of Labor reported Thursday.
While this level is still well above the pre-Covid norm, it is closest to the previous trend since the crisis began in March 2020, and is down from the 444,000 the previous week.
In a separate report, the trade department left its original estimate of gross domestic product unchanged in the first quarter at 6.4%. Durable goods orders also unexpectedly fell 1.3% in April, compared to the forecast growth of 0.9%. However, without transportation, orders increased 1%.
Economists polled by Dow Jones looked at the second GDP figure after 425,000 initial jobless claims to see a 6.6% growth.
In the week leading up to March 7, 2020, just before the pandemic became a factor, claims totaled 212,000. As of May 23, 2020, the claims totaled nearly 1.9 million.
“Many of the factors that pulled workers out of circulation at the start of the boom are changing, contributing to rapid employment growth for the remainder of 2021. The US pandemic is getting under control and alleviating health fears,” wrote Bill Adams, Senior Economist at PNC.
While claims have remained elevated during the pandemic period, they have recently decreased significantly in light of the economic reopening sparked by accelerated vaccines and a sharp drop in Covid cases.
Several states have also stopped their expanded benefit programs as businesses reopen and unemployment falls.
Ongoing claims fell sharply, declining 96,000 to 3.64 million, bringing the four-week moving average down to 3.68 million. This number is one week behind the total number of total entitlements.
Those who received benefits from all programs also fell, falling to 15.8 million, as the number of those applying through specific programs related to pandemics continued to decline.
GDP estimate unchanged
In the GDP report, the second estimate was unchanged from the previous month as upwardly revised indicators for consumer spending and non-residential fixed investment were insufficient to offset the downward changes in exports and private inventory investment.
While the number fell short of Wall Street’s expectations, it still reflected strong growth in a U.S. economy that was expected to falter at some point in the beginning of the new year.
One area that could attract attention was an upward revision in inflation-related readings.
The core price index for personal consumption expenditure is now 2.5% compared to the original estimate of 2.3%. Federal Reserve officials are closely monitoring PCE levels, all the more as inflationary pressures continue to mount.
The Fed expects recent price spikes to be temporary due to supply chain bottlenecks, while comparisons to last year seem high due to the economic stalemate related to the 2020 pandemic.
In terms of durable goods numbers, it was the first time in eleven months that orders for factory goods that were supposed to last at least three years fell. Volatile transportation orders fell 6.7% due to a lack of deliveries that resulted in significant backlogs and price spikes.
Corporate investment in non-defensible capital goods increased 2.3%.
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