Initial weekly UI claims continue to drop, but attention is starting to drift to rising counts of COVID-19 infections and whether it will halt momentum gained in the job market over the past several weeks. While multiple indicators have suggested a recovery is underway, a re-introduction of restrictions could cause the steady decline in unemployment insurance claims to stall or possibly begin to increase later in the summer. For the time being, the trend remains a positive one.
Seasonally adjusted initial claims were 1.48 million for the week ending June 20, and the totals for the week ending June 13 were revised up by 32,000 to 1.54 million. Continued claims declined by 3.8% from the prior week, to 19.522 million for the week ending June 13. Based on an estimate by LaborIQ® by ThinkWhy, the total of initial and continued claims has dropped by 7.4 million since the peak for the week ending May 9.
While some caution is being raised due to increased infections, more positive news was released last week regarding consumer spending. Census data showed new home sales increased almost 17% in May from the prior month. Given the long-term commitment of mortgages, it is one signal consumers are more confident in their ability to maintain income despite broader economic uncertainty. Earlier in the month, it was reported U.S. retail and food services sales increased a seasonally adjusted 17.7% from April to May.
With all 50 states implementing post-COVID-19 reopening plans, initial jobless claims for June should hover around 6.4 million. In the near-term, claims are expected to continue to decline as employers, particularly small businesses, reopen and fill vacancies. On the horizon, there are several states mulling changes to their recent loosening of restrictions, which could impact business’s ability to regain revenue momentum and fill vacant positions. Coupled with expiring PPP and supplemental unemployment benefits, changes in regulations related to COVID-19 will be a factor to watch for the remainder of summer 2020.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations and businesses across the U.S.