The United States heaves a sigh of relief as the unemployment claims drop sharply below 500,000 for the first time since the pandemic hit the global economy.
According to the data released by the Department of Labor, there was a sharp drop of 92,000 claims of unemployment in the week ending 1st of May. The numbers dropped significantly from 590,000 to 498,000 against the economist’s estimated expectations of 538,578.
Restrictions on activity continue to be lifted in the US, making way for rapid acceleration of improvement in the labor market. Economists predicted an addition of 100 thousand jobs this month with the quickest engagement in the hospitality sector which endured the most damage in the Covid crisis.
The country is vaccinating more than 2 million people every day amid the covid surge and is expected to vaccinate half of the population at one go. Citizens above the age of 16 are eligible to get vaccinated. The President of the US backed by the chairman of WTO has also supported waiving of intellectual property to make vaccines available to everyone at a rapid pace.
The US government has spent six trillion dollars as a relief fund to aid the country through pandemic over the past year. States like New York, New Jersey, and Connecticut have mostly lifted the covid related restrictions.
“While forecasts put a return to pre-pandemic employment two years off, job gains are cutting financial stress and poverty by leaps and bounds now, and this strong trend should continue at least through the summer,” said Robert Frick, a corporate economist with Navy Federal Credit Union.
A U.K based research firm Oxford Economics predicts an increase in jobs by 775,000 in April.
Nancy Vanden Houten, lead economist at Oxford Economics said, “Claims have declined by 33% since the start of April, further confirmation that a recovery in the labor market is well underway. We expect more evidence of that recovery in tomorrow’s April jobs report” she said.
Although the numbers show a significant rise in the employment rate, the non-farm payroll count is excluded from the list as it is outside the spectrum of the Bureau of Labor Statistics.
Reports from another economic study showed a hike in 5.4% labor productivity in non-farm business sectors in the first quarter against Dow Jones’ estimate of 4.5%.
The numbers are optimistic but they are not completely out of the red zone. The country still has 16.2 million people under unemployed strata. “Although unemployment remains elevated, the labor market is rapidly recovering,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
The state-level stats present an increase in claims in Kentucky with a 4,657 rise in numbers placing it at the top. States like Virginia saw a decline of (-23,909), Florida dropped its numbers to (-9,662) and California saw a decrease in numbers of (-7,402) making them among the lowest states with significant declines.