Unemployment Benefits Continue to Drop Despite the Spread of Delta Variant

The labor department reported on Thursday that the claims for Unemployment Benefits dropped last week, meeting Wall Street expectations, while longer-term unemployment signs showed improvement.First-time the jobless claim benefits dropped to 385,000 for the week ended July 31, a decline of 14,000 from the previous week as the jobs market remains essentially in a holding pattern during the economic recovery. The four-week moving average of the Unemployment Benefits claims, which smooths weekly volatility, was little changed at 394,000.

Claims have circulated largely in a range around the 400,000 level since mid-May, with employment rising in Covid-hit sectors such as leisure and hospitality but changing little in some other key sectors including most goods-related industries.However, continuing claims showed a sharp dip, according to data that runs one week behind the headline weekly number. That level plunged by 366,000 to 2.93 million, the first time continuing claims have fallen below 3 million since March 14, 2020.

The slide in continuing claims came as the total of those receiving benefits under all programs fell to just below 13 million, a reduction of 181,251, according to data through July 17 that reflected a drop in those receiving extended benefits. A year ago, that number was just shy of 32 million as enhanced Unemployment Benefits were directed to those displaced by widespread business lockdowns.

The claims numbers dropped a day ahead of the closely watched July nonfarm payrolls report from the Bureau of Labor Statistics. The Dow Jones estimate for the month is 845,000, a report Wednesday from payroll processing firm ADP showing just 330,000 more private payroll jobs could signal a disappointment for July.