Jobless Claims Likely to Fall as Labor Market Withstands Delta Variant

Applications for unemployment benefits are likely to reach a new pandemic low, showing a healing labor market even as the Covid-19 Delta variant continues to cause uncertainty.

Economists surveyed by The Wall Street Journal estimate that initial jobless claims, a proxy for layoffs, will decline by 10,000 to a seasonally adjusted 365,000 for the week ended Aug. 14. That would be the lowest level since the pandemic took hold in the U.S. in March 2020. The Labor Department will release the latest numbers at 8:30 a.m. ET Thursday.

New jobless claims are down more than 50% since January, but have hovered in a fairly narrow range between 424,000 and 368,000 since late May.

The Delta variant has caused recent increases in new Covid-19 cases and hospitalizations throughout the country. But while that might cause the pace of growth to ease, some economists say the dynamic between Covid-19 and economic activity has evolved over the past year.

“The data we’re seeing shows that while certain consumer areas may be starting to cool, activity does remain solid and labor demand remains extremely strong,” said Robert Rosener, senior U.S. economist at Morgan Stanley. Mr. Rosener said rising numbers of Covid-19 cases wouldn’t necessarily translate to a significant increase in jobless claims.