Last week, a disappointing read on jobless claims was lost in the cacophony around a blockbuster June payrolls report.
Or, actually, that’s not entirely true. To be honest, I was surprised at how much attention the claims numbers received on a day when the world’s most important top-tier economic data point printed a huge upside surprise, emboldening bulls and optimists ahead of the long holiday weekend in the US.
While nonfarm payrolls showed the economy added 4.8 million jobs last month, claims figures released at the exact same time (NFP came a day early due to the market closure last Friday), showed another 1.43 million Americans filed for unemployment benefits. More disconcerting, continuing claims rose.
Fast forward a week and the latest numbers aren’t much better, even as they came in ahead of estimates.
1,314,000 Americans filed last week. That’s less than the market was looking for. Consensus was at 1.38 million. This snaps a three-week stretch of initial claims coming in worse than anticipated, but the figure is far from comforting. The previous week was revised down to 1,413,000.
The four-week moving average (orange line in the figure) dropped to 1.44 million.
Continuing claims fell to 18,062,000 in the week ending June 27. That is good news. The market was looking for 18.8 million.
Perhaps more than any other data point, continuing claims has been a thorn in the side of optimists. Last week’s rise was disconcerting, so one imagines the drop, as well as what looks like a sizable downward revision for the previous week, will be welcomed.
Still, the bottom line is that initial claims aren’t falling very fast. They are declining on the margins, but as BMO’s Ian Lyngen notes, “it’s still a >1 million number which pre-pandemic would have been nearly inconceivable”.
Finally, I’d note that the total number of claimants for the week ended June 20 was 32,922,335. That’s considerably more than the 17.75 million ‘officially’ unemployed based on the jobs report.
Congress will debate the contents of an assumed next round of virus relief later this month. The White House says Trump wants to have something on his desk in early August. Hopes for the extension of extra federal unemployment benefits seem remote, which means the jobless will be in worse shape going forward assuming GOP lawmakers don’t acquiesce to calls for more assistance for the unemployed.
This comes against a backdrop of reinstated lockdowns in locales where virus cases are rising. Invariably, the curtailment of economic activity associated with new containment measures will mean some folks are laid off again. But that’s a story for later.