Weekly jobless claims rise less than expected

Weekly jobless claims edged higher last week but rose less than expected for an economy struggling to shake off impacts from a pandemic that has been around now for nearly a year.

The Labor Department on Wednesday reported that first-time filings for unemployment insurance in the week ended Feb. 27 totaled a seasonally adjusted 745,000, a touch below the Dow Jones estimate of 750,000. The total was a slight uptick from the previous week’s upwardly revised 736,000.

Unseasonably harsh winter storms in Texas took a toll on the labor market, resulting in an increase of 17,769 filings for the state, according to unadjusted data. Ohio and New York also saw considerable increases in claims.

Continuing claims again decreased, falling 124,000 to just below 4.3 million, another pandemic-era low, in data that runs a week behind the headline claims number.

“We expected a substantially bigger rebound after the huge winter storm pushed claims down, so this reading suggests that the underlying trend in layoffs is falling, thanks to the reopening now underway across many states,” said Ian Shepherdson, chief economist for Pantheon Macroeconomics.

“As always, though, two good weeks in this volatile series don’t prove anything, but whatever happens next week, we expect the trend to fall sharply over the next few months, provided the new Covid variants don’t trigger a spring wave in cases and, more importantly, hospitalizations. The jury is still out,” he added.

The report comes amid mostly positive signs for the U.S. economy.

Whereas economists had been expecting slow growth to start 2021 followed by an acceleration in midyear, estimates are being revised upward rapidly. The Atlanta Federal Reserve’s GDPNow tracker is pointing to 10% growth in the first quarter.

Still, fixing the jobs market has been the missing element in the broader picture. Though the unemployment rate has tumbled from a pandemic-era high of 14.8% last April to 6.3% in January, there are still huge gaps in employment.

A report Wednesday from ADP showed private hiring increased by just 117,000 in February, below the Dow Jones estimate of 225,000. The Labor Department is expected to report Friday that nonfarm payrolls grew by 210,000, though the ADP number adds some downside risk to that number.

There remain about 10 million unemployed workers through February, and the Labor Department report Thursday indicated that more than 18 million continued to receive some form of unemployment compensation through Feb. 13.

However, that total fell by just over a million, due largely to a decrease in enrollees for special pandemic-related programs that provide benefits to those not normally eligible as well as those who have exhausted their regular benefits.

A stimulus bill that Congress is poised to act on contains new allocations for enhanced unemployment benefits.