In another sign of the continuing tight labor market, new jobless claims hit a pandemic low at 290,000 for the week ending Oct. 9, following an upwardly revised reading of 329,000 in the previous week.
This significant drop continues to highlight a labor market in which demand for labor has been the main driver as businesses scramble to find workers and meet surging demand.
We should expect new claims to decline in the coming months as the spread of the delta variant eases and as the effect of Hurricane Ida is put in the past.
The total number of claims for all programs for the week ending Sept. 25 decreased to 3.6 million from 4.2 million in the prior week, and from 24.9 million compared to a year ago during the economic lockdowns of the pandemic.
While a drop in pandemic-related federal unemployment benefits, which expired on Sept. 6, led the decline in overall claims, we also saw a significant drop in claims for a non-pandemic extended unemployment program, to 222,613 from 390,656 in the previous week.
Although this is a good sign for the labor market, we cannot rule out that a fraction of such a drop in continuing claims might come as those categorized as unemployed find, for whatever reason, less incentive to work and drop out of the labor force. Workers who are not looking for a job are not considered in the labor force.
This could explain the drop in the labor participation rate in the recent payroll report from the Bureau of Labor Statistics.
At the state level, California posted the largest decreases of 14,733 new claims for the week ending Oct. 2, following by Washington, D.C., and Michigan, down by 3,905 and 3,370, respectively. New claims were up in Pennsylvania by 1,707 for the same week.