U.S. jobless claims drop sharply

More signs the labor market is picking up as layoffs subside. The number of Americans filing new jobless claims fell sharply to 406,000 last week.

That drop was much steeper than economists had expected, and it marked the third straight week that claims were below 500,000.

While the number has plunged from the record of over 6 million claims in April 2020, it remains well above the 200,000 to 250,000 that’s seen as consistent with healthy labor market conditions.

Companies are clamoring for workers to meet surging demand as the economy reopens. The labor shortage has been blamed on federal unemployment benefits. Nearly two dozen Republican governors have said they’ll end those jobless programs next month.

While there’s no consensus that the generous unemployment benefits are keeping people home, economists do see jobless claims and unemployment falling further as states end federal unemployment programs and economic re-engagement broadens out.