The number of Americans filing new claims for unemployment benefits declined further last week, while layoffs dropped to their lowest level in just over 21 years in July as companies held on to workers amid a labor shortage.

FILE PHOTO: People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira Karaoud/File Photo

The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed the number of people on state jobless rolls dropped in late July to its lowest level since March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 cases.

Though the data falls outside the survey period for July’s closely watched employment report, it bolstered economists’ expectations for another month of strong payrolls gains. The employment report for July is due to be released on Friday.

“From an employment-estimating perspective, this suggests a hefty increase in nonfarm payrolls tomorrow,” said Chris Low, chief economist at FHN Financial in New York.

Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 385,000 for the week ended July 31. Data for the prior week was revised to show 1,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast 384,000 applications for the latest week. Unadjusted claims, which economists say offer a better read of the labor market, decreased 20,602 to 323,763 last week.

There is no sign yet that a resurgence in COVID-19 infections, driven by the Delta variant of the coronavirus, is disrupting economic activity. Nearly half of the population has been fully vaccinated.

Claims fell in Florida, one of the states hardest hit by the current COVID-19 wave. There were also notable declines in applications in Texas, Pennsylvania, Michigan, and Tennessee.

“The latest week’s data was the first in the thick of rising Delta variant COVID-19 cases, and so far that rise in infections hasn’t pushed up layoffs,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Together with microdata such as airline flights and restaurant bookings, it appears that for now, the economy overall is holding fast against the fourth wave of infections.”

Claims remain above their pre-pandemic level of 256,000, though they have dropped from a record 6.149 million in early April 2020. There are still concerns that rising coronavirus cases could slow the labor market recovery amid a shortage of workers. There were a record 9.2 million job openings as of the end of May. About 9.5 million people are officially unemployed.

(GRAPHIC: Jobless claims - )

Reuters Graphic

The economy fully recovered in the second quarter the sharp loss in output suffered during the very brief pandemic recession. A separate report from the Commerce Department on Thursday showed the U.S. trade deficit surged to a record high in June as efforts by businesses to rebuild inventories to meet robust consumer spending drew in more imports.

Stocks on Wall Street were trading higher on the claims data. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.

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Reuters Graphic


The claims report showed the number of people continuing to receive benefits after an initial week of aid dropped 366,000 to 2.930 million during the week ended July 24, the lowest level since the pandemic started. The decline in the so-called continuing claims was led by California, which saw 256,370 people dropping off unemployment rolls.

Continuing claims declined 59,809 in Pennsylvania. There were also decreases in some of the states led by Republican governors that terminated federal government benefits before their Sept. 6 expiration.

Republicans and business groups have blamed enhanced unemployment benefits, including a $300 weekly payment from the federal government, for the labor crunch.

Still, the labor market recovery has a long way to go. About 12.975 million people were receiving unemployment checks under all programs in mid-July.

The Labor Department is expected to report on Friday that nonfarm payrolls increased by 870,000 jobs in July after rising 850,000 in June, according to a Reuters survey of economists. That would leave employment about 5.9 million jobs below its peak in February 2020.

July’s nonfarm payrolls estimate is highly uncertain, with labor market indicators mixed. In a separate report on Thursday, global outplacement firm Challenger, Gray & Christmas said job cuts announced by U.S.-based employers fell 7.5% to 18,942 in July, the lowest number since June 2000.

So far this year, employers have announced 231,603 job cuts, down 87.5% compared to the same period last year.

(GRAPHIC: Challenger Gray - )

Reuters Graphic

Data from Homebase, a payroll scheduling and tracking company, showed its employee's working index rose moderately in July from June. The ADP employment report on Wednesday showed the smallest private payrolls gain in five months in July.

That was, however, countered by two Institute for Supply Management surveys showing a rebound in manufacturing and services industries employment last month. The Conference Board’s labor market differential, derived from data on consumers’ views on whether jobs are plentiful or hard to get, in July hit its highest level since 2000.

“Labor market churn will pick up further in the coming months as the conditions in the labor market remain ripe for workers to seek better opportunities,” said Dante DeAntonio, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

A surge in imports of industrial supplies drove the US trade deficit to a record in June, according to government data released Thursday, a sign global supply chains may be coming back online after the pandemic disruptions.

The trade gap widened by $4.6 billion to $75.7 billion, a nearly seven percent increase compared to May, the Commerce Department reported. That was higher than analysts had expected and beat the previous all-time high set that month.

Imports of goods and services jumped $6 billion, most of which was accounted for by the rise in industrial materials and supplies such as iron, steel, and chemicals, as well as a $1.2 billion increase in non-monetary gold.

US purchases of imported consumer goods, including autos, actually fell in the month, according to the report.

Supplies of iron, steel, chemicals and gold flowed into the US economy at a faster pace in June, increasing the country's trade deficitSupplies of iron, steel, chemicals and gold flowed into the US economy at a faster pace in June, increasing the country's trade deficit Photo: AFP / Mahmoud KHALED


Exports also rose but gained just $1.2 billion compared to May.

As the world's largest economy has reopened and recovered faster than other regions, American businesses have reported struggles getting a steady supply of inputs.

"Supply chain disruptions are a risk but trade flows should rebalance as global economies come back online more completely," said Rubeela Farooqi of High-Frequency Economics.

The lifting of pandemic restrictions allowed travel and tourism -- categorized as a service export -- to increase $400 million in the month, according to the data.

The US trade deficit with China in goods alone narrowed slightly to $27 billion, while gaps with the European Union, India, and Japan all increased by around $1 billion.

Amazon has pushed back its return-to-office date for tech and corporate workers until January as COVID-19 cases surge nationally due to the more contagious delta variant.

Unlike its Seattle-area rival Microsoft and other tech giants, Amazon will not mandate employees receive the COVID-19 vaccine before they return to the office. Instead, the company said Thursday that unvaccinated employees will be required to wear masks in the office.

The surge of the delta variant of the coronavirus has upended many companies’ plans to bring office workers back this fall, a drive already complicated by efforts to accommodate widespread employee preference for flexible remote work policies and debates over how to handle vaccine and masking policies.

Other companies that have postponed reopening plans include Microsoft, Google, Twitter, and Lyft.

Amazon, which had previously set a Sept. 7 return date, said employees will now be expected to report to its U.S. offices on Jan. 3, according to plans previously reported by The Seattle Times. Amazon is also implementing a hybrid work plan that will allow many corporate employees to continue working from home at least two days a week.

The delay affects the roughly 60,000 people working in Amazon’s offices in Seattle and Bellevue, Washington, as well as tens of thousands more corporate Amazon employees worldwide. Amazon is Washington state’s largest private employer, and the delay in the return to office work will be a blow to the many downtown Seattle businesses that rely on the trade of tech workers.

The vast majority of Amazon’s 1.2 million-person global workforce is still expected to show up on-site to pack boxes, sort merchandise, and load and unload trucks at Amazon warehouses.

Before returning to the company's main office in San Francisco, where the vaccination rate is currently 70%, Uber's corporate employees must be vaccinated.

"White-collar workers, you're spending time together in an office eight hours a day, 10 hours a day," Uber CEO Dara Khosrowshahi told CNBC's Squawk Box in an interview this week. "Based on the [Delta] variant and the health concerns there it was an easy call in terms of coming back to the office," he said.

As far the "over 100 million riders and drivers constantly moving around together on a monthly basis," no such vaccine mandate will be instituted by Uber, he said.

The massive group that includes both Uber's contracted driving staff and the app's millions of users is simply too large for Uber to police, he said.

"It would only be fair to require vaccines for both riders and drivers," Khosrowshahi said. "To put that responsibility, that kind of decision-making power on a company, I don't think is right."

Uber does already mandates that both drivers and passengers wear masks.

"Before a driver or delivery person can go online, they will be asked to confirm, via a new Go Online Checklist, that they've taken certain safety measures and are wearing a mask or face cover," Khosrowshahi wrote in a blog post on May 13, 2020. "We've also built a similar checklist for riders. Before every trip, riders must confirm that they've taken precautions like wearing a face cover and washing or sanitizing their hands."

Uber's app could require proof of vaccination for both riders and drivers, but Uber is taking a different approach.

"Based on the circumstances that we're seeing now, the best path forward is for us and the government to push vaccination to really get the vaccination rates up," he said. "We think that's the best way forward."