Is the U.S. labor market improving, or are companies taking a pause after re-opening in the wake of an unprecedented shutdown?
That is the question on economists' and investors' minds on Thursday after the Labor Department reported that 860,000 Americans filed for first-time jobless benefits for the week ended Sept. 12, down from a revised 884,00 claims the week earlier.
The number marks the third straight week of claims below the 1 million mark since the pandemic shut down the U.S. economy in late March. However, analysts noted this was mostly due to a change in the way the Labor Department makes its seasonal adjustments, which applied for the first time to the last jobless claims report for August.
Indeed, while weekly initial claims for jobless benefits have stabilized just below 900,000 in recent weeks, they still remain above the highest level before this year on record, which was 671,000 in September 1982.
Economists and market-watchers note that businesses continue to struggle with what to do with furloughed and laid-off workers - even with government assistance helping them with pay day.
United Airlines (UAL) - Get Report has already announced thousands of permanent layoffs, while Ford (F) - Get Report, Boeing (BA) - Get Report, Coca-Cola (KO) - Get Report and others have said they plan to cut their payrolls.
Citigroup (C) - Get Report also announced this week that it will resume slashing its workforce, joining some of its rivals including Wells Fargo (WFC) - Get Report that are now reducing headcount in a bid to rein in costs ahead of what is anticipated to be a rising wave of business and personal loan losses.
That is in part reflected in the government's official employment tally, which as of last month showed that the economy is still out some 11.4 million jobs since March.
It's also very much on the Federal Reserve's radar. As part of its policy announcement on Wednesday, the Fed forecast unemployment will likely sit around 7.6% by the end of the year, better than its previous projection of 9.3% but still far off from what it considers "maximum employment" within the U.S. economy.
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