Initial weekly Unemployment Insurance claims continue a steady decline despite increasing COVID-19 infections across the country. Concern has been growing about the impact to the U.S. economy and labor market as new, or renewed, restrictions are imposed.
Seasonally adjusted initial claims were 1.3 million for the week ending July 4, and the totals for the week ending June 27 were revised down by 14,000 to 1.41 million. Continued claims decreased by 3.7% from the prior week, to 18.06 million for the week ending June 27.
Based on an estimate by LaborIQ® by ThinkWhy, the total of initial and continued claims has dropped by 8.8 million since the peak for the week ending May 9. The Bureau of Labor Statistics has reported approximately 7.5 million jobs have been added since April, and the gap between those two numbers suggests job growth should be strong again if there are no additional impacts related to business restrictions.
Congress has responded by passing an extension to the Paycheck Protection Program (PPP), where approximately $130 billion of the initial $670 billion remains unclaimed. Another measure providing an additional $600 per week in federal unemployment benefits is set to end at the end of July, and it’s not clear yet whether Congress will extend it.
Another measure reported by the BLS is the U-6 unemployment rate, which was reported at 18.0% for June. LaborIQ by ThinkWhy estimates unemployment at 16.9% using Unemployment Claims. Increased infections have caused restrictions to be reimposed, adversely affecting business activity.
Job openings jumped a record 400K in May after a record drop in April, reflecting the turbulence the U.S. economy has experienced through the pandemic. Job openings increased in Accommodation and Food Services and Retail and Construction – industries hit hard by the pandemic – but overall employment remains below levels in February, prior to the virus outbreak. The ability of local governments to contain the spread will shape businesses’ ability to sustain the momentum.
Restrictions and COVID-19 confirmed cases are rising once again. The extension to apply to the PPP may offer a lifeline to businesses running out of alternatives, and key legislative decisions including supplemental unemployment benefits should be closely watched. Additionally, new restrictions will impact businesses already stretched thin. Because of those factors, LaborIQ® by ThinkWhy expects initial jobless claims for July should hover around 7.5 million, slightly above the June total, but well below the peaks earlier in the spring. The key remains whether enough people can be hired to cause the continued claim total to decline and offset the number of initial claims.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, and businesses across the U.S.