- The number of US jobless claims last week totaled 3.2 million, the Labour Department said Thursday. The median economist estimate was for 3 million claims.
- That raises the seven-week total to more than 33 million.
- It’s the fifth straight week in which claims have declined, signalling the worst shock of the coronavirus pandemic to the labour market may be in the past.
- Still, the fact claims have stayed in the millions for weeks shows persistent economic fallout from the coronavirus pandemic.
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The number of Americans who have filed for unemployment insurance amid the coronavirus outbreak continued to grow last week.
US jobless claims totaled 3.2 million last week, the Labour Department said Thursday. The median economist estimate was for 3 million claims for the seven days that ended Saturday. The figure raises the seven-week total to more than 33 million.
Still, it’s the fifth straight week in which new unemployment-insurance claims have fallen, suggesting that the worst of the shock to the labour market has passed. But claims remain elevated at a level that dwarfs that of the largest week of US job losses – 665,000 – during the Great Recession.
“It’s very clear the labour market is still taking it on the chin from the coronavirus,” Ryan Sweet, a senior economist at Moody’s Analytics, told Business Insider.
A slow road down
While jobless claims are moving in the right direction, the weekly report is likely to show elevated numbers for some time.
“We could get down to maybe between one and two million by the end of May, which is still elevated by historical standards,” Lindsey Piegza, chief economist at Stifel, told Business Insider. “But it is much improved from those peak levels that we saw initially.”
Economists expect claims to trend down but remain historically high for a few reasons. One is that it’s likely some states are still working through backlogs of claims that overwhelmed unemployment office systems never meant to handle millions of applications per week.
In addition, even though some states have begun to open parts of their economies shut down to contain Covid-19- which should help the labour market – these reopenings will be slow, according to Piegza. That could delay a rush back to the workforce for people who have been laid off amid the pandemic.
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“It’s not going to be a flip the switch scenario,” Piegza said, adding that it will take a while for businesses to be up and running, and for consumers to be ready to be back out shopping and going to movies and restaurants.
“I do think it’s going to be a very slow, tepid recovery, which is going to continue to reflect in very dismal labour market numbers,” she said.
What’s coming next
The weekly jobless claims number comes one day before the April jobs report, set to be released by the Labour Department Friday. Following weeks of millions of jobless claims, economists expect the April jobs report to show a devastating picture of the US labour market reeling from the coronavirus crisis.
Estimates are for millions of jobs lost in April and a leap in the unemployment rate. Bank of America said the report should live in infamy, and forecast 22 million lost jobs and a surge in the unemployment rate to 15% from 4.4% in March.
The dismal projection was supported by a Wednesday report from the ADP Research Institute showed that US companies lost 20.2 million private payrolls in April. James Bullard, the Federal Reserve Bank of St. Louis, said the Friday jobs report will likely be one of the worst ever.
On Tuesday, President Donald Trump said that the US economy should soon reopen even if it means that the Covid-19 death toll rises. So far, more than 70,000 Americans have died from the coronavirus, and there are more than 1.2 million confirmed cases in the US.
Even if the economy does completely reopen soon, the shutdowns to contain the disease have done considerable damage. It will take time for both businesses and consumers to recover from severe economic fallout stemming from the outbreak.