Following two straight weekly increases in first-time claims for U.S. unemployment benefits, the Labor Department released a report on Thursday showing initial jobless claims pulled back by much more than expected in the week ended August 1st.
The report said initial jobless claims tumbled to 1.186 million, a decrease of 249,000 from the previous week’s revised level of 1.435 million.
Economists had expected jobless claims to edge down to 1.415 million from the 1.434 million originally reported for the previous week.
With the much bigger than expected decrease, jobless claims dropped their lowest level since the coronavirus-induced lockdowns in mid-March.
“The latest jobless claims data were much better than expected and suggest that the stalling in the labor market recovery in July didn’t get worse as the month came to a close,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
“We think there is some risk that the expiration of federal supplemental benefits discouraged some individuals for filing claims,” she added. “If that’s the case, initial claims would likely bounce back if and when those benefits are renewed.”
The Labor Department said the less volatile four-week moving average also fell to 1,337,750, a decrease of 31,000 from the previous week’s revised average of 1,368,750.
Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also plunged by 844,000 to 16.107 million in the week ended July 25th.
The four-week moving average of continuing claims subsequently slumped to 16,628,250, a decrease of 413,250 from the previous week’s revised average of 17,041,500.
On Friday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of July.
Economists currently expected employment to jump by about 1.6 million jobs in July after spiking by 4.8 million jobs in June. The unemployment rate is expected to dip to 10.5 percent from 11.1 percent.
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