Coronavirus latest: White House sets up ‘surge response teams’ to tackle Delta hotspots

New filings for unemployment aid in the US fell back below 400,000 last week to a fresh pandemic-era low, as lay-offs slow and businesses struggle to recruit workers amid a rebound in economic activity.

A report from the labour department on Thursday said there were 364,000 initial jobless claims on a seasonally adjusted basis, down from 415,000 in the previous week. Economists had expected 390,000 new claims.

While the pace of unemployment claims has slowed, weekly applications are still above pre-pandemic levels of about 200,000. The labour market remains down 7.6m jobs since February 2020 — the month before coronavirus shutdowns began in the US — even with job openings hitting a record high in April.

But Covid-19 vaccinations and low levels of coronavirus cases across the US have added fuel to the labour market’s recovery from the pandemic-induced downturn, especially for the hard-hit services sector that includes leisure and hospitality businesses.

Economists forecast that hiring accelerated in June, estimating in a Reuters poll that US employers added 700,000 jobs. The labour department, which reported 559,000 new jobs in May, will publish its June report on Friday.

Some predictions are less optimistic. Analysts at Capital Economics have pencilled in a 500,000 rise in jobs, citing “severe labour shortages” that are keeping a lid on hiring.

The jobless claims report tallied 115,267 claims made through the federal pandemic unemployment assistance programme, which provides benefits to the self-employed and others who would not qualify for regular handouts. The programme logged 111,778 new claims the week before.

A combined 3.47m Americans were actively collecting state jobless benefits as of June 19, compared with 3.41m a week earlier. The insured unemployment rate held steady at 2.5 per cent.

About a dozen states have ended the federal government’s supplemental unemployment benefits early in an effort to alleviate worker shortages. A total of 25 states have laid out plans to opt out of the programme, which provides an extra $300 a week in jobless aid per person.

In addition to bigger-than-usual unemployment cheques, fears related to coronavirus and childcare issues have kept some people from rejoining the workforce, according to economists. Stock market gains have encouraged some employees to retire early, adding to labour shortages.