An additional 1.877 million Americans have applied for unemployment benefits in the week ended May 30, slightly above expectations of 1.843 million claims. 42 million Americans have filed for claims since the onset of the coronavirus pandemic and subsequent labor market collapse. The claims for the previous week were revised from 2.13 million to 2.12 million.
Key Takeaways
- 1.877 million Americans applied for unemployment benefits in the week ended May 30 vs. 1.843 million expected and 2.13 million the week before.
- Continuing claims came in at 21.49 million for the week ended May 23, up from 20.84 million the week before and above expectations of 20 million.
- Pandemic Unemployment Assistance (PUA) claims, including claim for contractors and self-employed workers, fell from 1.3 million to 623,073.
Unemployment claims continued to tick downward from the peak seen in March last week, with 1.87 million claims reported. However, while new claims are trending downward as expected, continuing claims are not.
The number of Americans receiving benefits after an initial week of aid was expected to drop by almost 1 million as various states begin to reopen businesses. However, continuing claims rose two weeks ago from 20.84 million to 21.49 million, indicating worsening unemployment. It’s estimated that as many as 1 in 4 workers who lost their jobs in March will not be rehired when their state reopens, and many businesses will be filing for bankruptcy in the coming weeks and months.
It's not good that continuing jobless claims ticked higher again https://t.co/kQjaD5qPWi pic.twitter.com/Rp1gM85hKJ
— Joe Weisenthal (@TheStalwart) June 4, 2020
California reported 230,000 jobless claims in the week ended May 30, the highest of any state and 27,000 higher than the week before. Florida reported increased claims as well, rising from 175,000 to 206,000. Georgia came in at 148,000 and Texas reported 107,000 claims.
Labor Market Conditions
The report follows the ADP employment report released on Wednesday which showed job losses in the private sector of 2.76 million, far lower than forecasts of 9 million losses. The report triggered a mild selloff in the gold markets and contributed to a more upbeat, risk-on attitude in the overall financial markets.
While the ADP report isn’t always accurate when it comes to assessing the labor market, an increasing number of analysts believe that the labor market is seeing the benefits of a reopening economy already. This is not supported by current continuing claims data, which lags two weeks, and tomorrow’s employment report will shed more light on the reopening.
Expert Outlook
Barclays released a client note stating that the worst of the labor market collapse is behind us, saying “[Last] week’s jobless claims data contains more good news than bad. Continuing claims for the week ending May 16 fell by 3.9mn, to 21.052mn, leading to a drop in the insured unemployment rate to 14.5%, from 17.1% previously. “This likely signals that the hiring rate accelerated and is broadly consistent with our outlook for a near-term peak in the unemployment rate in May, followed by declines thereafter.”
Market Reaction
Gold prices have seen upward momentum following yesterday’s selloff, buoyed upward by the unexpectedly high number of Americans receiving ongoing unemployment benefits. Spot gold last traded at $1,714.88/oz, up .97% with a high of $1,717.42/oz and a low of $1,694.56/oz. The price spike also follows the news that the ECB is increasing its bond-buying program by 600 billion Euros, with retail sales down 19.5% annually in the Euro zone.
