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The U.S. labour market has improved

26 February 2021
2 min.
The U.S. labour market has improved

U.S. unemployment

The number of jobless claims in the USA fell sharply last week to a three-month low. Retail sales data, lower COVID-19 cases and vaccination also added to the optimism. However, winter storms in the south-east of the USA, including Texas, will bring a short-term deterioration in numbers.

On Thursday the US Labor Department reported significantly better-than-expected weekly figures for the number of initial jobless claims filed by economists.

Other preceding government data also showed positive trends.

Number of jobless claims in the U.S.

Initial jobless claims posted the biggest weekly drop since late August.

Applications fell by 111,000 to 730,000 in the week ended February 20 as Covid-19 cases declined, many service providers resumed operations and the pace of vaccinations accelerated. This is significantly better than the economists' forecast of 838,000.

At the same time, the figure is still far from the "pre-pandemic" level, when the labour market performance was at a record high.

The number of continuing jobless claims also fell to 4.42 million, the lowest since 21 March, but also well above the "pre-pandemic" norm.

One expert said these improvements also reflected the impact of the nearly $900 billion pandemic aid bill the government provided in late December.

The US unemployment rate fell to 6.3% in January 2021, down 0.4% from the previous month and well below market expectations of 6.7%. At the same time, the pre-pandemic unemployment rate was 3.5%.

Fed Chairman Jerome Powell, speaking to Congress this week, said that the central bank will pay more attention to the employment rate than to the unemployment rate.

The US economy has recovered 12.3 million of the 22.2 million jobs lost during the pandemic. Employment is not expected to return to pre-pandemic levels until 2024.

However, analysts warn that the situation may change in the short term as a full labour market recovery is hampered by ongoing quarantine restrictions related to the coronavirus and the lack of new financial assistance from the US government.

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