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People line up outside a newly reopened career centre in Louisville, Ky., on April 15, 2021.

AMIRA KARAOUD/Reuters

Fewer Americans filed new claims for unemployment benefits last week as the labour market recovery gains steam amid an economic boom, which is being fuelled by a rapidly improving public-health situation and massive government financial assistance.

Initial claims for state unemployment benefits totalled a seasonally adjusted 498,000 for the week ended May 1 compared to 590,000 in the prior week, the Labour Department said on Thursday. That was the lowest level since mid-March, 2020, when mandatory shutdowns of non-essential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 540,000 applications in the latest week.

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The U.S. government has provided nearly US$6-trillion in pandemic relief over the past year. Americans over the age of 16 are now eligible to receive the COVID-19 vaccine, leading states such as New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.

Reports on Wednesday showed private employers hired the most workers in seven months in April, while a measure of services industry jobs rose to a more than 2½-year high. Consumers’ perceptions of the labour market are the strongest in 13 months.

Labour market strength was reinforced by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by U.S.-based employers fell 25 per cent in April to 22,913, the fewest since June, 2000.

Planned layoffs so far this year are down 84 per cent from the same period in 2020. The reports bolstered expectations for another month of blockbuster job gains in April.

According to a Reuters survey of economists, non-farm payrolls likely increased by 978,000 jobs last month after rising by 916,000 in March. That would leave employment about 7.4 million below its peak in February, 2020.

Estimates range from as low as 656,000 to as high as 2.1 million jobs. The Labour Department will publish April’s employment report on Friday.

“The good news is that employers are no longer undergoing massive cuts, consumers are beginning to feel safe travelling and spending, and the number of job openings is edging higher,” said Andrew Challenger, senior vice-president at Challenger, Gray & Christmas. “The bad news is we’re experiencing a labour shortage despite the millions of Americans still out of work.”

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Jobless claims have dropped from a record 6.149 million in early April, 2020. They are, however, well above the 200,000 to 250,000 range viewed as consistent with a healthy labour market.

Part of the elevation has been blamed on fraud as well as the enhancement of the unemployment benefits programs, including a weekly US$300 subsidy, which could be encouraging some people to attempt to file a claim for assistance, though not every application is approved. The generous aid has also been blamed for worker shortages across many industries.

“Over the next few months, most people who want a job should have a chance to get one,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pa. “The only thing that would limit the increase in payrolls is that the government is paying more to be on the unemployment rolls than the private sector is paying to work at their businesses. The choice is clear, at least until the enhanced benefits run out.”

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