New US jobless claims drop below 400,000, first time since pandemic

New applications for unemployment benefits dropped below 400,000 for the first time since the pandemic caused mass layoffs in the United States, government data showed Thursday.

A seasonally adjusted 385,000 new claims for jobless aid were made in the week ended May 29, fewer than expected and 20,000 less than the week prior, the Labor Department said, in the latest sign that the pandemic's disruptions to the job market are nearing their end.

Another 76,098 people, not seasonally adjusted, made claims under the Pandemic Unemployment Assistance (PUA) program for workers not normally eligible for aid, more than 17,000 less than the week prior.

"Downward trend in unemployment benefits is encouraging but absolute levels still concerning," Gregory Daco of Oxford Economics said on Twitter, pointing to the more than 15.4 million people as of the week ended May 15 who were receiving some form of unemployment benefit.

Weekly jobless claims shot into the millions in March 2020 after businesses shut down nationwide to stop Covid-19 from spreading.

They have been on a sustained downward slide as vaccinations allow businesses to resume, hitting new pandemic lows back-to-back in recent weeks.

The data also showed the four-week moving average of claims dropping 30,500 to 428,000, its lowest level since the pandemic began.

The insured unemployment rate indicating people approved for regular benefits rose slightly to 2.7 percent, with nearly 3.8 million insured as of the week ended May 22.

The non-seasonally adjusted total of people receiving benefits under all programs, reported with a two-week lag, was 366,178 lower than the week prior, according to the report.

Rubeela Farooqi of High Frequency Economics warned that the claims reports in weeks to come may give a distorted picture of the employment situation, since 25 states have ended special pandemic unemployment programs like PUA in a move she expects to impact 3.6 million people.

"It is still unclear that a decline in these levels will translate into substantial job growth and send an accurate signal about labor market conditions," she said in an analysis.