- It's the first time that continuing claims, reflecting those receiving unemployment benefits, have declined since coronavirus-induced layoffs began in March.
- It's a sign that hiring may be rebounding slightly as states continue reopening their economies following shutdowns to curb COVID-19.
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Total US unemployment shrinks for the first time since coronavirus layoffs began in March
Roughly 21.1 million Americans claimed unemployment insurance in the week ending May 16, a decline from the previous week's record of roughly 25 million, according to Thursday's report from the Labor Department .
FILE PHOTO: People who lost their jobs are reflected in the door of an Arkansas Workforce Center as they wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), in Fort Smith, Arkansas, U.S. April 6, 2020. REUTERS/Nick Oxford -/File Photo/File Photo
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This week's jobless claims report contained a surprise total unemployment dipped for the first time since layoffs due to the coronavirus pandemic shutdown began in March.
Thursday's report from the Labor Department showed that 21.1 million Americans claimed unemployment insurance in the week ending May 16, a decline from the previous week's record of roughly 25 million. Total unemployment, reflected in continuing claims, lags initial claims data by one week.
"It's still an extremely large number, but if the number of people continuing to file for unemployment benefits is decreasing then this should be viewed as a positive for the economy as more people are going back to work as states begin the re-opening process," said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, in an email.
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initial vs continued claims 5 23 20
Andy Kiersz/Business Insider
Initial claims, or new filings for unemployment insurance, also declined to 2.1 million in the week ending May 23, the Thursday report showed. It marks the eighth week in a row of falling filings, and brings the total number of initial claims to more than 40 million since mid-March.
The weekly decline in total unemployment and initial claims comes as the US begins to reopen its economy following about two months of sweeping lockdowns to contain the spread of COVID-19. Now, all 50 states have relaxed at least some of the restrictions they put in place in March.
Falling continuing employment suggests that as states reopen, businesses that had to lay off employees when the virus hit are hiring people back, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Still, the headline number may overstate the true extent of hiring, according to Shepherdson. This is because California requires people to file for benefits on a bi-weekly basis, and this report reflects an off-week. California continuing claims fell by 1.4 million this week, even though the state remained in a near-total lockdown during the week reflected.
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"We're discounting this as evidence of an improving labor market," Shepherdson said.There were more positive signs in other state numbers, however Florida's continuing claims fell by 1.6 million during the week.
Some economists are hesitant to cheer the decline or say it represents a turn in the labor market. While there may be signs that hiring is picking up, there's still a long way to go before the damage of the coronavirus pandemic is undone.
In addition, new programs have made the weekly jobless claims report more difficult to parse. The slump in continuing claims this week may not be due to hiring, according to James Knightley, chief international economist at ING.
The decline "may reflect more the fact the continuing claims numbers are state benefits and don't include the people claiming the Pandemic Unemployment Assistance - they are not eligible for regular or extended unemployment benefits," said Knightley.
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Filings under the separate Pandemic Unemployment Assistance program, which expands benefits to those not previously eligible, fell to an unadjusted 1.19 million from 1.25 million Thursday, representing 32 states reporting. Including PUA, the total number of initial claims under federal and state programs declined to 3.1 million for the week ending May 23.
Thursday's report also showed that the total number of people claiming benefits for all programs state and federal rose to about 31 million in the week ending May 9 from 27.3 million a week earlier. The measure is the broadest look at how many Americans are filing for unemployment, and is not seasonally adjusted.
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