COVID-19’s impact on the U.S. labor market was in focus after the U.S. Labor Department released weekly initial jobless claims data Thursday morning.
Another 2.123 million Americans filed for unemployment benefits in the week ending May 23, exceeding economists’ expectations for 2.1 million initial jobless claims. The prior week’s figure was revised higher to 2.446 million from 2.438 million jobless claims. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance.
Continuing claims, which lags initial jobless claims data by one week, totaled 21.05 million in the week ending May 16, down from the prior week’s record 24.91 million. Consensus estimates were for 25.68 million continuing claims for the week.
“This marked the first weekly decline in the [continuing claims] data since the end of February. Continuing claims are still up substantially relative to the pre-virus norms but it will be important to see if this recent weekly decline marks a turning point in the data,” J.P.Morgan wrote in a note Thursday. “Moves down in continuing claims generally suggest that the number of unemployed people is moving lower, but we also want to keep in mind that unemployed people might not be receiving unemployment insurance through the regular state programs.”
After hitting a record in the week ending March 28, the weekly initial jobless claims figure has been on a steady decline.
“Although initial claims are declining, the pace may only be plateauing. If UI claims remain in the millions for the next few weeks, it may signal that relaxed state-mandated restrictions alone aren’t enough to staunch the flow of unemployed Americans,” Glassdoor Senior Economist Daniel Zhao said in an email Thursday.
In the week ending May 23, California reported the highest number of jobless claims at an estimated 212,000 on an unadjusted basis, down from 244,000 in the previous week. New York had 192,000, down from 224,000. Florida reported 174,000 and Georgia had roughly 164,000 jobless claims.
Economists have been paying close attention to the Pandemic Unemployment Assistance (PUA) program figures, which include those who were previously ineligible for unemployment insurance such as self-employed and contracted workers.
In the week ending May 23, the Labor Department reported 1.19 million initial PUA claims, following 1.2 million in the week prior.
“The 2.2 million in new claims reported for last week was a reporting error: the actual number was closer to 1.2 million. More than a dozen states have not reported their initial PUA claims and could be a source of increase in coming weeks,” UBS economist Seth Carpenter explained in a note May 22.
The Bureau of Labor Statistics will release the May jobs report June 5, and the unemployment rate is expected to have skyrocketed to 19.5% from 14.7% in April.
“Since the May employment report reference period started, roughly 15.8mn initial jobless claims have been filed, 10.9mn through regular state programs and 4.9mn in PUA,” Nomura economist Lewis Alexander wrote in a note May 22.
The employment crisis in the U.S. will likely weigh on the economy for some time, according to Goldman Sachs.
“The U.S. unemployment crisis will not stand in the way of a near-term economic recovery but is also unlikely to go away quickly. Although the uncertainty is unusually large, we still see the U.S. unemployment rate around 8% in late 2021, well above the levels in most other advanced economies,” the firm wrote in a note Tuesday.
As of Thursday morning, there were 5.72 million coronavirus cases and 356,000 deaths worldwide, according to Johns Hopkins University data. In the U.S., there were 1.7 million cases and 100,400 deaths.