Continued Claims Revised Somewhat Higher But Still at Lowest Levels in Five Decades, as Labor Market Remains Extremely Strong

• Initial claims for unemployment insurance fell slightly to 166,000 in the week ending April 2.
• After increasing earlier this year with the omicron variant, claims have fallen below their already low pre-pandemic level of around 200,000 per week.
• Continuing claims rose slightly to 1.523 million and were revised somewhat higher.
• The labor market remains very strong as the spring quarter begins.

The initial claims data was benchmarked with new seasonal adjustment models back to 2017. The downward trend in past year is little changed and the very recent weekly data show an even lower number of initial claims but a higher number of continuing claimants. Initial claims for unemployment insurance fell to a multi-decades low of 166,00 in the week ending April 2, down from 171,000 the previous week. The four-week moving average of claims, which smooths out some of the volatility, fell to 170,000 in the week ending April 2. Initial claims for unemployment rose in early 2022 to close to 300,000 as the omicron variant hit the labor market, but more recently have fallen below the 200,000 per week where initial claims stood before the pandemic! The insured unemployment rate remained at a very low 1.1 percent in the week ending March 26, down from 2.7 percent in the same week a year ago.                           

The total number of people receiving benefits under regular state unemployment insurance programs (continuing claims) rose by 17,000 in the week ending March 26 at 1.523 million from an upward revised 1,506 million the previous week. The four-week moving average of continuing claims fell to 1.541 million from 1.576 million the previous week. Continuing claims are at decades-long lows as unemployed workers leave the program’s rolls, either because their benefits have expired or because they have quickly found a new job. After peaking at more than 23 million in May 2020, state continuing claims have now moved to their lowest levels since the early 1970s.

The labor market remains in excellent shape in the spring quarter begins. Demand for labor is very strong, and with the labor force smaller than it was before the pandemic, firms are competing for workers and bidding up wages. Employment increased by an average of 562,000 per month in the first quarter, well above the pre-pandemic pace of around 150,000 per month. Total employment fell by 22 million in March and April 2020 as the pandemic hit the U.S. labor market; since then the economy has added back 20.6 million of those lost jobs. The U.S. should return to its pre-pandemic level of employment over the summer. The unemployment rate, which peaked at almost 15% in April 2020, was 3.6% in March 2022. It should return to its pre-pandemic level of 3.5% by mid-year.

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