Jobless Claims Below 1 Million Under New Labor Department Tally

First-time jobless claims fall to 881,000 last week as the Labor Department unveils a new way of tallying first-time unemployment benefits.

The number of Americans applying for first-time jobless benefits came in lower than expected last week, though a new way of calculating unemployment applications likely sugar-coated the numbers. 

The Labor Department reported Thursday that 881,000 Americans filed for first-time jobless benefits for the week ended Aug. 22, down from a revised 1.006 million claims the week earlier. Economists polled by FactSet had been expecting claims of 965,000.

Continuing claims, which are the number of people not just filing but staying on unemployment benefits, came in at 13.254 million for the week ended Aug. 15, revised downward from 14.492 the previous week, the Labor Department said.

Some 13.57 million people claimed Pandemic Unemployment Assistance benefits through last week, while an additional 1.393 million individuals claimed Pandemic Emergency Unemployment Compensation benefits, the government said.

From the onset of the coronavirus pandemic in March, economists and market-watchers have been keeping an eagle eye on weekly jobless claims figures for signs of how the unprecedented economic shutdown and subsequent reopening have impacted the labor market.

At the same time, the Labor Department’s weekly tally of jobless claims haven’t been reported on a seasonally adjusted basis - until now. 

Thursday’s report marks the first time the Department of Labor has counted new and continuing jobless claims under an updated system that now smooths out the bigger week-to-week gyrations in the numbers.

No matter how it is tallied, the number of jobs lost in the pandemic and the number of Americans seeking unemployment benefits has been staggering. While companies have re-hired furloughed workers and the number of people filing for benefits has dropped from a near-7 million peak in March, millions of Americans are still out of work. 

That was evident from ADP's private payrolls report released on Wednesday, which showed that U.S. companies continued to temper their plans to re-hire displaced workers last month as the pandemic stretched into its sixth month.

For a clearer snapshot, market-watchers will be paying close attention to August’s nonfarm payroll report, to be released by the Labor Department on Friday. Analysts polled by FactSet are expecting some 1.5 million jobs to have been created last month following June's 1.8 million gain.

The unemployment rate is expected to dip to 9.8% from 10.2% in July.

Meantime, the states with the largest increases in initial claims for the week ended Aug. 22 were California (+6,562), Illinois (+3,856), Pennsylvania (+1,926), Kansas (+1,061), and Rhode Island (+503). The biggest drops in claims occurred in Florida (-21,127), Texas (-9,248), New Jersey (-5,235), Virginia (-3,715), and North Carolina (-3,708).