The numbers: New applications for U.S. unemployment benefits fell sharply in late February to a three-month low, but the still-high number of layoffs suggests the economy is rebounding slowly from last winter’s record coronavirus onslaught.
Initial jobless claims filed traditionally through the states sank by 111,000 to 730,000 in the week ended Feb. 20, the government said Thursday.
The steep decline was much bigger than expected, but the claims data has been very erratic and unreliable lately owing to processing snafus, bad weather and other problems. Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would total a seasonally adjusted 845,000.
Another 451,402 applications for benefits were filed through a temporary federal-relief program.
Adding up new state and federal claims, the government received 1.16 million applications last week for unemployment benefits, based on actual or unadjusted figures.
Combined claims have yet to drop below 1 million a week since last May. Before the pandemic, new claims were running in the low 200,000s and they had never risen by more than 695,000 in any one week.
See: A visual look at how an unfair pandemic has reshaped work and home
What happened: Most of the decline in new applications for jobless benefits took place in California in Ohio, two states that have experienced great difficulty with fraudulent claims and processing delays.
The number of people already collecting traditional unemployment benefits, meanwhile, fell by 101,000 to a seasonally adjusted 4.42 million. These claims are reported with a two-week lag.
Yet an additional 5.1 million who have exhausted state compensation are getting benefits through an emergency program funded by the federal government. That’s up 1 million from the prior week.
Altogether, the number of people reportedly receiving benefits from eight separate state and federal programs was put at an unadjusted 19 million as of Feb. 6, a increase of 701,102 from the prior week.
Fewer than 2 million people were getting benefits before the pandemic erupted.
Read: Inflation worries are back. Should you worry?
Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting. Economists say to pay attention to the direction of claims instead of the totals.
Read: Jobless claims inflated, GAO finds
Also: Why the inaccurate jobless claims report is still useful to investors
The big picture: Layoffs remain extremely high and millions of people are still unemployed nearly a year after the pandemic began.
What is less clear is precisely how people are losing their jobs each week.
The government’s figures on jobless claims have been very unstable lately and are now being skewed by big winter storms and the massive power outage in Texas. They could increase again in the next few weeks.
Economists predict jobless claims will fall sharply later this year as more people get vaccinated and Washington approves nearly $2 trillion in extra stimulus. But it’s going to take time and not all the lost jobs are coming back.
What they are saying? “As much of a relief it is to see this figure decline, don’t take it at face value,” said senior economist Jennifer Lee of BMO Capital Markets.
“We think this decline this week should be viewed with caution,” economists at Jefferies LLC told clients.
Market reaction: The Dow Jones Industrial Average DJIA, -0.03% and S&P 500 SPX, -0.09% were set to open lower in Thursday trades.