US states’ jobless rolls shrank for the first time during the Covid-19 pandemic in a sign people are starting to return to work, even as millions more Americans filed for unemployment benefits.
Continuing jobless claims, which tally Americans’ ongoing benefit claims in state programs, fell to 21.1mn for the week ended May 16, Labour Department figures showed yesterday.
Those data are reported with a one-week lag.
That suggests the job market is starting to rebound as businesses reopen.
Analysts had expected an increase in continuing claims.
But the economic damage from the pandemic is still hitting hard throughout the country.
Initial jobless claims for regular state programs totaled 2.12mn in the week ended May 23, to bring the 2 1/2-month total above 40mn.
The median estimate in a Bloomberg survey of economists called for 2.1mn claims.
US stock futures and Treasury yields rose after the report.
Despite optimism in financial markets, economists expect the recovery from the pandemic to take years, and with no vaccine or significant treatment yet available, a return to normal activity is unlikely.
The US reached a grim milestone of 100,000 deaths from the virus on Wednesday, the highest official toll in the world.
Next week’s May jobs report is forecast to show an unemployment rate of around 20%, the highest since the Great Depression, when it peaked at an estimated 25.6%. While the latest initial-claims tally was down from the prior week’s 2.45mn and marked the eighth straight weekly decline, it’s still far above the 212,000 average of initial claims in the first two months of 2020 and the pre-pandemic record of 695,000.
California, New York, Florida and Georgia had the highest initial claims last week.
Pantheon Macroeconomics chief economist Ian Shepherdson flagged one caveat with the continuing claims numbers: While “gross hiring is beginning to rebound,” the figure “overstates the true extent of the hiring,” given that California — where residents file every other week — posted a 1.4mn unadjusted decline, Shepherdson said in note.
Florida also showed a drop of 1.6mn.
Thursday’s report also showed that filings under the separate, federal Pandemic Unemployment Assistance program — which expands unemployment benefits to those not traditionally eligible, such the self-employed and gig workers — fell to 1.19mn from 1.25mn on an unadjusted basis, covering 32 states.
The prior week’s figure was revised lower by about 1mn due to an error by Massachusetts.
The latest week’s figure for the federal pandemic claims brought the total number under federal and state programs to 3.11mn last week, down from 3.43mn the prior week.
Many states are still reporting zero claims under the federal program.
Total continuing claims under all state and federal programmes — which provides the broadest look at the number of Americans claiming unemployment benefits — rose to 31mn in the week ended May 9 from 27.3mn.
That number isn’t adjusted for seasonality and other factors.
A separate report Thursday showed US orders for durable goods sank sharply for a second month in April as the pandemic wrecked havoc on the manufacturing industry.
State unemployment offices have struggled to keep up with record demand for benefits amid the economy’s sudden stop and wave of layoffs since mid-March.
Many applicants have waited on edge for the payments without receiving them.
California, the most populous state, said Wednesday it’s seeking 1,800 additional staff to help process claims, joining about 3,000 current and temporary employees working on the issue.
The state said 700 employees worked over the Memorial Day weekend, particularly to process claims that arrived via paper.
The weekly federal report has been marred by data errors and quirks recently, with mistakes from Connecticut and Massachusetts swinging the national figures and California distorting the continuing claims because of the biweekly schedule for residents to file.
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