U.S. Labor-Market Improvement Shows Further Signs of Slowing
The number of Americans seeking unemployment benefits was higher than forecast for a second straight week.
(Bloomberg) -- A higher-than-expected number of Americans sought unemployment benefits for a second week, signaling a slowdown in U.S. labor-market improvement.
Initial jobless claims in regular state programs fell by 60,000 to 1.48 million last week from an upwardly revised figure the prior week, Labor Department data showed Thursday. Economists surveyed by Bloomberg News had forecast 1.32 million initial claims.
Continuing claims, a closely watched figure that tracks the overall pool of recipients, declined by more than forecast to 19.5 million in the week ended June 13.
“Even though you’re obviously getting a lot of people rehired, the people being laid off is eating into that quite a bit,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. “What you’re seeing is a second leg of layoffs. Now it’s not just the service sector being shut down. Now it’s businesses saying, ‘Well, I don’t need all these people.’”
Read more: Bloomberg’s TOPLive blog on Thursday’s economic data
U.S. stocks fluctuated, while Treasuries and the dollar were higher on the day as markets focused on a separate report Thursday that showed orders for durable goods and business equipment jumped in May by more than forecast.
The unemployment figures underscore the risks to the recovery from deep labor-market damage across the country. While states have largely eased restrictions on businesses and some consumer demand has returned to support those jobs, virus cases have been resurgent in many large states and consumer spending remains subdued compared with pre-pandemic levels.
Some of the job losses are emerging from the largest U.S. companies as they adjust to an economy and consumers reshaped by the pandemic. Macy’s Inc. announced Thursday that it will cut about 3,900 corporate and management jobs to slash costs in an effort to weather the long-term effects on the reeling retail sector.
“Unless the job market starts healing much more quickly, the V-shape recovery” will contain “just an initial bounce -- and then economic activity will start to level off,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics.
Even so, economists generally expect continued improvement in the hard-hit labor market; the government’s monthly jobs report next week is projected to show employers added 3 million workers to payrolls in June, following 2.5 million in May.
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On an unadjusted basis, initial claims fell by just 6,000, the smallest drop of the pandemic. California had the largest increase in initial jobless claims last week, with a 45,900 unadjusted rise. Other states with significant increases included Arizona, Florida, Indiana, Maryland, Kansas, New Jersey, Nevada, Pennsylvania and Washington.
The largest decrease occurred in Oklahoma, with a 35,600 drop. Kentucky, Oregon and New York also saw big drops.
Progress could potentially reverse in the virus hotspot of Texas, where initial claims declined by 5,500 last week. Governor Greg Abbott on Thursday halted new phases of reopening the economy in the second most-populous state, citing a surge in Covid-19 cases and hospitalizations.
Another measure that considers total claims under all programs -- which includes the federal Pandemic Unemployment Assistance program aimed at self-employed and gig workers -- increased to an unadjusted 30.6 million in the week ended June 6. The figure includes 11 million people on PUA benefits, compared with 18.3 million on regular state benefits.
What Our Economists Say
“Jobless claims are still stubbornly high, but the downward trend may accelerate after the augmented ($600 per week) benefit expires at the end of July... As the economy relaxed lockdowns, the drop in continuing claims is an encouraging sign that more Americans are returning to work and that reduced slack in the labor market is slowly forming.”
-- Eliza Winger
Read more for the full reaction note.
Initial claims under PUA totaled 728,120 in the week ended June 20, down from 770,920 the prior week.
Commerce Department figures on Thursday showed U.S. orders for durable goods jumped 15.8% in May, the most in nearly six years as nationwide reopenings rekindled demand for a broad range of merchandise and equipment.
At the same time, another report showed U.S. merchandise exports sank in May to the lowest in more than a decade while imports dropped.
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