U.S. weekly jobless claims total 745,000, less than expected

(March 4) U.S. weekly jobless claims total 745,000, vs 750,000 estimate.

• Initial jobless claims, week ended February 27:750,000 expected vs. 730,000 during the prior week

• Continuing claims, week ended February 20:4.300 million expected vs. 4.419 million during the prior week

Initial jobless claims sank far more than expected last week, though at least some of the drop appeared to have stemmed from data collection issues due to the extreme winter weather blanketing the country mid-month. Still, new jobless claims are expected to tick up only modestly after last week's pronounced drop, suggesting some underlying improvements in unemployment trends.

But at the same time, jobless claims remain multiples above levels from before the COVID-19 pandemic, when new claims were averaging just over 200,000 per week. Returning to pre-pandemic levels of employment is likely to depend heavily on the pace of business reopenings, and consumers' propensity to return to service-centric activities most deeply affected by stay-in-place orders, many economists have noted.

"I think consumers are ready to spend more on services. They’re ready to travel, they’re ready to go out to restaurants. So I would expected we see very strong services job growth as we get towards the middle of 2021," Gus Faucher, PNC chief economist, told Yahoo Finance Live on Wednesday. "And we’ll make a serious dent in the labor market, and I would expect that we’ll be back to our pre-pandemic level of employment sometime in the second half of 2022."

Continuing jobless claims, which are reported on a one-week lag and measure the total number of individuals still receiving regular state unemployment benefits, are expected to decline for a seventh consecutive week.

But the number of Americans claiming unemployment benefits across all programs remains sharply elevated: Some 19 million Americans were still claiming benefits across all programs as of February 6, the latest date for which data is available. That included more than 12.5 million Americans on Pandemic Unemployment Assistance — the federal program offering benefits to gig workers and the self-employed who do not qualify for other programs — and Pandemic Emergency Unemployment Compensation, which offers additional up to 24 weeks of benefits.

This week, the U.S. Senate is debating another $1.9 trillion coronavirus relief package, which was passed by the U.S. House of Representatives last weekend. This package would include measures extending federal unemployment benefits beyond their current March 14 expiration date. Senator Ron Wyden (D., Ore.), chairman of the Senate Finance Committee,said Tuesday that he was leading Senate Democratsin pushing for the package to include an automatic extension of unemployment benefits based on economic conditions, which would remove additional unemployment benefit cliffs going forward.