New US jobless claims slide to 385,000 while continuing claims hit pandemic low

• Jobless claims declined to 385,000 last week, capping a frothy month that saw the hiring recovery slow.
• The print just missed the median estimate of 383,000 claims while marking a second straight drop.
• Continuing claims totaled 2.93 million, the lowest reading since claims surged in March 2020.

The number of Americans filing for unemployment benefits dropped less than expected last week, capping off a volatile month that signaled a slowing of the labor market's rebound.

Jobless claims dipped to an unadjusted 385,000 last week, the Labor Department announced Thursday. That compares to a median estimate of 383,000 claims from economists surveyed by Bloomberg. The reading also keeps claims well above the pandemic-era low set earlier in July.

The prior week's reading was revised to 399,000 from 400,000.

Continuing claims, which count Americans receiving unemployment benefits, sank to 2.93 million for the week that ended July 24. That's the lowest level since claims spiked in March 2020. Economists had expected continuing claims to fall slightly to 3.23 million.

Last week saw Louisiana join the states prematurely ending the government's $300-per-week boost to unemployment insurance.

Continuing claims have been the go-to gauge of how the early cancellations are affecting workers. Insider analysis shows continuing claims falling in the states that ended the supplement before its planned September expiration. Conversely, continuing claims stand slightly higher in the predominately Democratic states that haven't cut the boost early.

Initial claims hovered at elevated levels through the end of last month, ending what had been a promising downtrend through spring and early summer. July saw daily COVID cases rebound and climb to their highest level since February as the more transmissible Delta variant spread across the US. State and local governments have since reimposed some restrictions to curb the virus's spread.

Weekly claims counts remain roughly twice their pre-pandemic average, joining other indicators showing the labor market is still far from a full recovery. The overshoot could also be a result of greater awareness of unemployment insurance programs, Kathryn Anne Edwards, an economist at the RAND Corporation, told Insider on Tuesday. The CARES Act of March 2020 changed the incentive, size, and delivery of benefits to make them far more effective, and that could permanently lift the programs' effectiveness, she added.

"It's not that the majority of unemployed workers don't get UI, it's that the majority never apply for it," she added.

Other labor market data suggests hiring is falling well short of expectations. Private-sector payrolls rose by 330,000 last month, according to ADP, falling well short of economists' 683,000-payroll estimate. The print marked the smallest one-month gain since February and a sharp slowdown in job growth from the month prior. The report also suggests the Bureau of Labor Statistics' Friday jobs report could disappoint, though ADP data has been unusually decoupled from the government's report through the pandemic.