Almost 1.9m Americans filed for unemployment benefits for the first time last week, taking the total number of new claims to nearly 43m since lockdowns began in mid-March as the US economy struggles to reopen.
Initial jobless claims slowed for the ninth consecutive week to 1.87m in the week ended May 30, the US labour department said on Thursday. That marked the first time claims fell below 2m in the eleven weeks since the start of the pandemic shutdowns, and compares with economists’ expectations of 1.84m.
Continuing claims, which counts the number of people actually receiving benefits and is considered a gauge of ongoing unemployment, edged up to 21.5m for the week ending May 23.
The slowing in the pace of jobless claims indicates some Americans are returning to work as states have begun to emerge from Covid-19 shutdowns and reboot activity.
California and Florida were the states with the highest initial claims last week at 230,461 and 206,494 respectively.
The federal Pandemic Unemployment Assistance Program, which has extended aid to the self-employed and others, recorded 623,073 new applications in the week ended May 30. However, the expanded jobless benefits that were part of the Cares Act are expected to expire in July.
“While the drop in new claims is welcome news and more evidence that the worst of the job losses are behind us, the recovery in the labour market is expected to be painfully slow,” said Gregory Daco, economist at Oxford Economics. “We look for a two-phase recovery, with an initial burst in rehiring followed by a much slower retracement of job losses.”
The pandemic is expected to wipe out a cumulative $15.7tn of output from the US economy this decade, the Congressional Budget Office said this week.
Federal Reserve chair Jay Powell has said the US central bank is “strongly committed” to deploying measures to help the economy during the coronavirus pandemic.
Concerns remain that largely peaceful protests against racism and police brutality following the death of George Floyd which are accompanied by sporadic looting and vandalism of businesses could delay reopenings and slow the recovery.
Other data released Thursday further highlighted the pain in the US economy, as the US trade deficit in goods and services widened to $49.4bn in April, compared with $42.3bn the previous month, the Commerce Department said.
Both US and global trade has already been hamstrung in recent years by economic brinkmanship between Washington and Beijing and political tensions have escalated in recent weeks during the pandemic and over the status of Hong Kong rule.
On a more positive note, US non-farm business sector productivity was revised higher to show a 0.9 per cent drop in the first quarter, compared with initial estimates for a steeper 2.5 per cent decline in the first three months of the year. The decline in productivity, a key driver of output and wage growth, came as hours worked fell by 5.6 per cent.
US equity markets were slightly weaker on opening on Thursday, following strong rally that produced the biggest ever gain over a 50 day stretch.
The weekly jobless claims figures come ahead of Friday’s non-farm payroll report, which is expected to show the US economy shed 8m jobs in May on top of the record 20.5m in job losses the previous month — pushing the unemployment rate to 19.5 per cent.
The House of Representatives has approved a fresh $3tn of stimulus though the measure is unlikely to gain Republican support, who argue the Democratic plan, which includes an extension in jobless benefits until early next year could deter Americans from returning to work.
