Labour market regaining footing despite rise in U.S. jobless claims

• The number of Americans filing new claims for unemployment benefits rose last week, likely boosted by brutal winter storms in the densely populated South in mid-February, though the labour market outlook is improving amid declining new COVID-19 cases.

That was confirmed by other data on Thursday showing job cuts announced by U.S.-based companies plummeted 57 per cent in February. The labour market has lagged an acceleration in overall economic activity, driven by nearly US$900 billion in additional pandemic relief provided by the government in late December.

“The jobs picture is beginning to firm up again after a rough winter,” said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, N.C.

Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 745,000 for the week ended Feb. 27, the Labor Department said. Economists polled by Reuters had forecast 750,000 applications in the latest week.

Unadjusted claims rose 31,519 to 748,078 last week. Filings increased significantly in Texas, as well as in Ohio, which has been plagued by fraudulent applications. There was also a large rise in claims in New York.

Stormy weather in the South has left large parts of Texas without power or water for days. The deep freeze shut oil production and refineries in Texas, the biggest producer of natural gas and oil in the United States.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state programs, 1.2 million people filed claims last week.

But the sun is slowly starting to peek through the clouds shrouding the labour market. In a separate report on Thursday, global outplacement firm Challenger, Gray & Christmas said U.S. companies announced 34,531 job cuts in February. That was the smallest since December 2019 and was down from 79,552 January.

“The churn has come to a halt,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.

“If healthy job creation follows, this could mean a full recovery is on the horizon, especially as companies see an end to the pandemic in sight.”

U.S. stocks were mixed. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.

A drop in daily coronavirus cases and hospitalizations helped to lift consumer spending in January. Though the pace of decline in infections has stalled, economists believe the labour market will accelerate in the spring and through summer, noting that vaccinations were increasing daily.

A boost to hiring is also expected from President Joe Biden's US$1.9 trillion recovery plan, under consideration by Congress.

BRYAN WOOLSTON / REUTERS FILES Claims for state unemployment benefits increased 9,000 to a seasonally adjusted 745,000 in the U.S. last week, better than a poll of economists that forecast 750,000.