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Applications for US state unemployment benefits plunged last week to a level not seen since 1969, which if sustained would mark the next milestone in the labor market’s uneven recovery.

Initial unemployment claims in regular state programs fell by 71,000 to a seasonally adjusted 199,000 in the week ended Nov. 20, Labor Department data showed Wednesday. The median estimate in a Bloomberg survey of economists called for 260,000 applications.

However, the larger-than-expected drop may be explained by how the government adjusts the raw data for seasonal swings. Wrightson ICAP chief economist Lou Crandall pointed out in a recent note that seasonal factors were anticipating a smaller increase in unadjusted claims compared with the same time last year as the labor market was struggling to recover.

Before seasonal adjustments, last week’s initial jobless claims rose by about 18,000.

Claims stood at 216,000 at the end of February 2020 leading up to the onset of Covid-19 in the U.S., which pushed applications up to a peak of 6.1 million in early April 2020. They’ve since declined as the economy reopened more broadly and Americans returned to work. Also, federal pandemic unemployment benefits ended by Sept. 6 in all states.

Even so, millions of Americans are still choosing to sit on the sidelines, frustrating employers who are desperate to fill a near-record number of positions. Child care remains a serious issue for working parents, especially as Covid cases pick up again in many states and disrupt in-person learning.

The October jobs report showed payrolls increased 531,000 after large upward revisions to the prior two months. Economists are calling for another half a million to be added in November, which will be reported on Dec. 3.

 

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