KEY POINTS

  • The number of people filing new claims has dropped to just under 4.3 million
  • Last week, 745,000 people applied for unemployment insurance for the first time
  • All numbers point to positive changes in the US economy

The U.S. labor market showed modest signs of an economic recovery with lower-than-expected jobless claims despite a devastating snowstorm that brought life to a standstill in Texas. Though new claims rose in Texas, Ohio, New York and some other states, the numbers were not as bad as analysts were expecting for an economy struggling from a year-long pandemic. 

According to Ian Shepherdson, chief economist for Pantheon Macroeconomics, "We expected a substantially bigger rebound after the huge winter storm pushed claims down, so this reading suggests that the underlying trend in layoffs is falling, thanks to the reopening now underway across many states."

On Thursday, the Labor Department reported a seasonally adjusted 745,000 first-time filings for joblessness insurance ended Feb. 27, which was 5,000 short of the Dow Jones estimate. The number was a slight rise from previous week's 736,000. 

Continuing claims, however, decreased by 124,000 to just below 4.3 million. 

“As always, though, two good weeks in this volatile series don’t prove anything, but whatever happens next week, we expect the trend to fall sharply over the next few months, provided the new Covid variants don’t trigger a spring wave in cases and, more importantly, hospitalizations. The jury is still out,” Shepherdson said.

The data adds to signs that the economy is about to bounce back.

Economists have long expected a slow growth for the American economy starting 2021, especially after an acceleration in midyear. However, the Atlanta Federal Reserve’s GDPNow tracker is already leaning towards a 10% growth in the first quarter.

The Labor Department is expected to announce a 210,000 increase in nonfarm payrolls on Friday, but the ADP figure were not encouraging. According to a study released by ADP on Wednesday, private employment increased by just 117,000 in February, compared to a Dow Jones forecast of 225,000.

A workforce study released Thursday found more than 18 million people are still receiving unemployment benefits.

To further help long-standing unemployed Americans, Congress is expected to release a stimulus bill.