The number of workers applying for unemployment benefits in the United States dropped sharply last week to a level not seen in over 50 years, suggesting businesses were holding on to employees amid a tight labor market.
First-time filings for unemployment insurance—a proxy for layoffs—came in at 199,000 for the week ending Nov. 19, the Labor Department said in a report (pdf). That’s a drop of 71,000 from the prior week’s revised level of 270,000 and well-below consensus forecasts of 260,000.
Besides notching a fresh pandemic-era low and marking the eighth straight week of declines, Wednesday’s jobless claims number is also the lowest since Nov. 15, 1969, when there were 197,000 filings.
“It is fair to say that we didn’t see that coming. Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement,” Bankrate Senior Economic Analyst Mark Hamrick told The Epoch Times in an emailed statement.
“Americans head into the heart of the holiday season with a reasonable expectation that an already tight job market will continue to tighten in the months ahead,” he added.
The strong jobless claims data comes as businesses continue to report hiring difficulties, with the most recent report from the National Federation of Independent Business (NFIB) showing that a net 44 percent of small-business owners reported boosting wages to attract and retain staff, the highest reading in the 48-year history of the series.
“One of the biggest problems for small businesses is the lack of workers for unfilled positions and inventory shortages, which will continue to be a problem during the holiday season,” NFIB chief economist Bill Dunkelberg said in a statement earlier in November.
Average hourly earnings rose 4.9 percent in the year through October, a faster pace of wage growth than the 4.6 percent year-on-year increase last month, the Labor Department said in a Nov. 10 release (pdf). Still, with over-the-year consumer price inflation in October running at 6.2 percent, wages actually contracted by around 1.3 percent in real terms.
In a sign of jobs market tightness, the labor force participation rate—a measure of people working or actively looking for work—has been stuck at a historically depressed level. The Labor Department’s most recent jobs report, released Nov. 5, showed the labor force participation rate in October stood at 61.6 percent, unchanged from September but well below the pre-pandemic level of 63.6 percent in February 2020, and far off the historical peak of 67.3 percent in April 2000.
Commenting on Wednesday’s jobless claims release, Queen’s College President and economist Mohamed El-Erian called the number “good news for the economy,” but added that “the big question for the labor market remains the scope for increasing labor force participation.”
While the reason for the lagging labor force participation rate isn’t immediately clear, economists have cited COVID-19 fears among employees returning to the office, government assistance programs and policies, the stress of the pandemic prompting a spike in retirements and resignations, along with a lack of access to affordable child care.