Even as the U.S. adds jobs in large numbers as restaurants and other Main Street businesses shuttered by the COVID-19 outbreak reopen, the nation is still hemorrhaging hundreds of thousands of positions as the economic effects spread to other industries.
About 1.5 million Americans filed first-time applications for unemployment insurance last week, the Labor Department said Thursday. That pushes the tally of those who have made initial claims – a rough measure of layoffs — over the past 12 weeks to a staggering 44.1 million.
The good news is the total is down from 1.9 million the prior week, has fallen 10 straight weeks since peaking at 6.9 million at the end of March, and is the lowest figure since the pandemic began. If the trend continues, the count likely will dip below a million by early July, says economist Ian Shepherdson of Pantheon Macroeconomics.
The weekly tallies are still far higher than the previous record of 695,000 unemployment claims during a deep recession in October 1982.
Initial jobless claims remain at levels that at the start of the year might have seemed unthinkable,” Oxford Economics said in a research note.
Another key measure of unemployment, the total number of people receiving benefits, fell by 339,000 to 20.9 million, in the week ending May 30. These so-called continuing claims, which lag initial claims by a week, have also trended down recently but have been volatile in part because of California and Florida, which require the unemployed to file claims every two weeks.
Excluding those states, continuing claims fell by a more substantial 586,000 on a non-seasonally adjusted basis.
The figure has become more significant because it reflects the vast majority of those still unemployed and should keep falling as more states reopen their economies. Initial claims, by contrast, are made up of those laid off the prior week.
The Labor Department said last week that the economy added 2.5 million net jobs in May, showing that the number of unemployed workers rehired as businesses reopen outpaced the number of layoffs – a turnabout that occurred a month sooner than anticipated. Yet with layoffs persisting in large numbers, that trend must continue to ensure that, in the second half of the year, the economy can reverse at least half the unprecedented damage inflicted by the coronavirus, as many analysts expect.
Employers shed a record 22 million jobs in March and April before recovering about a tenth of those last month. The claims recorded last week will figure into the June employment report, which is expected to reveal further payroll gains as states allow a growing number of businesses to reopen.
“Hirings exceed firings, so a positive payroll number for June is a good bet,” Shepherdson says.
The stubbornly high level of initial jobless claims indicates “that layoffs have clearly spread well beyond” the industries directly affected by the pandemic and state shutdowns, Wells Fargo wrote in a note to clients. Increasingly, for example, manufacturing, administration and professional services firms have been hit by job cuts after airlines, hotels, restaurants, retailers, movie theaters and beauty salons were initially affected.
Last week, the number of initial claims fell by 97,000 in Florida, 17,000 in Texas, 14,000 in Georgia, 11,000 in Michigan and 10,000 in Oklahoma.
Totals rose by 29,000 in California, 17,000 in Massachusetts and 9,000 in Maryland.
An additional 706,000 people filed initial claims under a separate program that expands eligibility to the self-employed and independent contractors, among others, during the crisis. About 10 million Americans were already receiving unemployment checks under that program, known as Pandemic Unemployment Assistance.