First-time filings for unemployment insurance hit a pandemic-era low last week, a sign that the jobs market is improving heading into the fall despite worries over the delta Covid variant.

Jobless claims for the week ended Aug. 14 totaled 348,000, the Labor Department reported Thursday. That was below the Dow Jones estimate for 365,000 and a decline of 29,000 from the previous week.

The last time claims were this low was March 14, 2020, just as the Covid-19 pandemic declaration hit and sent the U.S. economy spiraling into its deepest but briefest recession on record.

In the weeks that followed, more than 22 million Americans would be sent to the unemployment line, sending the jobless rate skyrocketing to 14.8%. The jobs market has been on a steady recovery trajectory since then but remains well off its pre-pandemic health.

Stocks were volatile following the news, with the Dow Jones Industrial Average well off its lows for the morning and down just slightly in early trading.

Continuing claims also fell, dropping to 2.82 million on a 79,000 decline from the week before. That data runs a week behind the headline claims number and also represented a new low since the pandemic struck.

The total of those collecting benefits under all programs fell to 11.74 million, a decline of 311,787 for the week ended July 31 and owing mostly to a big drop in those receiving enhanced benefits, which will come to a complete close in September. A year ago, the total under all programs stood at 28.7 million.

A sizable chunk of the decline in claims came from Texas, which fell by 8,311, according to unadjusted data. Illinois also declined 3,577 and Michigan was lower by 2,188.

Overall, the drop could be good news for a jobs market that has seen nonfarm payrolls increase by 2.5 million over the past three months and the unemployment rate fall to 5.4% from 6.3% at the beginning of the year. Thursday’s data reflects the period the Labor Department uses as its survey week for the monthly nonfarm payrolls count.

There remains, however, a large jobs gap, with some 6 million fewer Americans considered employed now than prior to the pandemic. There also were 8.7 million workers looking for jobs in July, though that was well below the 10 million or so job openings in the U.S.

Economists see a multitude of reasons for the inability to get back to full employment. Among them are ongoing fears about the pandemic, workers pressing for higher wages and the enhanced government benefits that have lowered the incentives for taking jobs.

Wages have been increasing in response to the current conditions, with average hourly earnings up 4% year over year in July. Prior to the pandemic, that would have been a record in data going back to March 2007.

A separate report Thursday showed the pace of manufacturing growth in the Philadelphia region slowed in August. The Philadelphia Fed’s manufacturing index declined to 19.4 from 21.9 the month before. The reading represents the percent difference between firms seeing expansion vs. those seeing contraction. The level was below the Dow Jones estimate of 22.

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Federal Reserve officials at their July gathering made plans to pull back the pace of their monthly bond purchases likely before the end of the year, meeting minutes released Wednesday indicated.

However, the summary of the July 27-28 Federal Open Market Committee gathering indicated that the central bankers wanted to be clear that the reduction, or tapering, of assets was not a precursor to an imminent rate hike. The minutes noted that “some” members preferred to wait until early in 2022 to start tapering.

“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes stated, adding that the economy had reached its goal on inflation and was “close to being satisfied” with the progress of job growth.

However, committee members broadly agreed that employment has not met the “substantial further progress” benchmark the Fed has set before it would consider raising rates.

Addressing interest rate concerns, committee members also stressed the need to “reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in the target range for the federal funds rate.”

Fed officials have said repeatedly that tapering will happen first, with interest rate hikes unlikely until the process has been completed and the central bank isn’t growing its balance sheet anymore.

Markets briefly rebounded after the minutes’ release but then turned negative again, with the Dow Jones Industrial Average down more than 150 points.

The FOMC voted at the meeting to keep short-term interest rates anchored near zero while also expressing optimism about the pace of economic growth.

While the message about tapering had been telegraphed, the Fed has a difficult communications job in making sure its strategy is clearly outlined. There are concerns in the market that the Fed might set its tapering pace on a strict course even if the economy sours.

The post-meeting statement painted a generally upbeat look on the economy, but the minutes noted some misgivings.

Officials judged that “uncertainty was quite high” about the outlook, with the Covid-19 delta variant posing one challenge and inflation another. Some members noted “upside risks to inflation,” in particular that conditions Fed officials have labeled as transitory might last longer than anticipated.

Those worried about inflation said tapering should start “relatively soon in light of the risk that the recent high inflation readings could prove to be more persistent than they had anticipated.”

However, the minutes noted substantial differences of opinion, with some members even worried that inflation could go back into a downward drift if Covid cases keep rising and potentially dampening economic growth.

While the market is expecting tapering soon, it still doesn’t see interest rate hikes coming at least for another year or so. Futures contracts tied to the fed’s benchmark interest rate are pricing in about a 50% chance of a rate hike in November 2022 and a 69% chance of an increase the next month.

There also was talk about “elevated valuations” across asset classes, with some members worrying that easy Fed policy was raising prices and threatening financial stability.

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