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Is the U.S. labor market finally on the mend after a historic job losses stemming from the coronavirus pandemic? Many reports suggest the answer is yes — and more confirmation might come with the latest report on new jobless claims.
Read:Private sector shed 2.76 million jobs in May, ADP says, much less than forecast
More than 45 million applications for unemployment benefits have been submitted since the coronavirus pandemic began in March, government records show. And at least 1.8 million jobless workers probably applied in the week ended May 30, according to economists polled by MarketWatch.
Yet these numbers exaggerate the admittedly historic damage done to the U.S. labor market.
The more important figure to watch is the number of unemployed people actually collecting unemployment checks online or in the mail. The government reports these figures with a one-week lag under a heading called “continuing jobless claims.”
“Continuing claims is the more important indicator for the labor market than initial claims, which may overstate unemployment,” Citibank economists wrote in a recent report. The data are one of six featured in Marketwatch’s Coronavirus Economic Recovery Tracker.
The “good” news? Actual or unadjusted continuing claims fell by 3.7 million to 19 million in the week ended May 16 — the most recent data available — based on applications filed traditionally through state unemployment offices. That marks the first substantial decline since the COVID-19 crisis slammed the U.S. and suggests more people returned to work as states reopened their economies.
A second straight decline in the week ended May 23 would be yet another sign the economy has bottomed out and is starting to recover.
“As many states relax restrictions, with the construction and manufacturing sectors the first to reopen, millions of furloughed or laid-off workers will likely return to work soon,” Moody’s Analytics economists said in a survey of the labor market.
Read:Manufacturers show faint signs of revival in May as economy slowly reopens
The magnitude of the crisis and the chaos it has sowed, however, makes it hard to determine the scope of recovery.
For one thing, the states are reporting new and continuing jobless claims filed through a temporary federal-emergency relief program under separate categories. What’s more, not every state is reporting the federal numbers and some of the data are two weeks behind.
Looking at all continuing claims for jobless benefits through eight different state and federal programs, they totaled an unadjusted 30.96 million in the week ended May 9. That was up from 27.28 million in the prior week.
Yet the decline in continuing claims filed traditionally through state unemployment offices, if it keeps up, suggests the overall number of people still at home and collecting unemployment benefits should also start to drop soon.
