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US jobless claims drop sharply as government changes counting method

<span>Photograph: Robert F Bukaty/AP</span>
Photograph: Robert F Bukaty/AP

The number of people filing claims for unemployment benefits dropped sharply last week as the US labor department switched to a new method of counting weekly jobless claims figures.

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For the week ending 29 August, 881,000 claims for benefits were filed, down from just over 1m the previous week. It was only the second time since the pandemic hit the US economy that claims had dipped below 1m.

However, last week the labor department announced it was switching its statistical model to better reflect the extraordinary number of unemployment claims made during the pandemic.

Government bodies routinely use “seasonal adjustments” to smooth out annually occurring events that can cause spikes in numbers, such as the January layoffs of retail workers hired for the holiday season. The unprecedented nature of the coronavirus has meant the old method of seasonal adjustments may have overstated the actual number of weekly unemployment claims.

While the fall in the latest claims numbers suggests firings are slowing, the job market remains deeply troubled. The labor department said the total number of people claiming benefits in all programs for the week ending August 15 was over 29 million, an increase of 2m from the previous week.

On Friday, the August jobs report will be released. The government’s broadest look at the labor market is expected to show another dip in the unemployment level to below 10% as workers are rehired following the lifting of quarantine measures. The level, however, is expected to remain close to the peak witnessed in the Great Recession.