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An additional 5.245 million Americans filed for unemployment benefits in the week ended April 11, slightly below the expected figure of 5.5 million. 22 million Americans have been laid off in the last month, with coronavirus containment procedures shutting down businesses nationwide in almost every sector.

Key Takeaways

• Initial jobless claims were 5.245 million vs. 5.5 million expected last week, down 1.2 million from the week before.
• Insured unemployment for the week ended April 04 rose 4.5 million to 11.9 million.
• The insured unemployment rate rose 3.1% to 8.2%, the highest level seasonally adjusted level of insured unemployment ever.

The latest report from the US Labor Department indicates an additional 5.2 million layoffs in the week ended April 11 as the labor market continues to collapse under the weight of the global coronavirus pandemic. The four-week average, which usually irons out volatility in claims, rose 1.2 million to 5.508 million. Last week’s claims were revised upward by 6,000. Continuing claims have hit an all-time high of 11.9 million, below the estimated figure of 13.2 million. A new all-time high is likely to occur next week.

22 million Americans have filed for unemployment benefits in the last four weeks, with an estimated 11.7 million layoffs in restaurants and bars, 9.5 million claims in retail (excluding groceries and gas stations), 6.7 million in air or rail transport, and 4.2 million in leisure and hotels. The current rate of unemployment is like y to be around 18 – 22%.

Slow-motion train wreck: Weekly initial U.S. jobless claims for the week ending 4/11 produced 5.245 million applications, implying a near real-time U3 rate of 18.1%. Once one adds in those not captured by the data we are almost certainly facing a 20% unemployment rate now. pic.twitter.com/hPn3LGBYln

— Joseph Brusuelas (@joebrusuelas) April 16, 2020

The largest increases in claims for the week ended April 4 were in Georgia, with 256,312, followed by Michigan with 84,219, Arizona with 38,982, Texas with 38,982, and Virginia with 34,872. The largest decreases were in California with 139,511, Pennsylvania with 127,037, Florida with 58,599, and Ohio with 48,097.

After hitting an all-time high at 6.8 million in the week ended March 27, initial jobless claims have declined for two weeks in a row, indicating that layoffs have peaked for now. It’s estimated that the labor market may see some form of recovery by late next year.
Expert Outlook

Robert Alster of Close Brothers Asset Management points out that the worst of the layoffs may be over, although stated that there’s no guarantee that the same number of jobs will be available after the government lockdown is lifted.

 “The question on the lips of both policymakers, and those who’ve lost their jobs, is how long will it take for companies to start hiring again once the country ‘reopens’ for business? In truth, we don’t know – but many will be hoping President Trump is right in his projection that, once the lockdown is lifted, America’s unemployed find work considerably more quickly than in previous recessions.

“Of course it is not inconceivable that companies choose to hire more conservatively; either due to the possibility of further lock downs or as a way to restructure and emerge from this crisis in better shape.”

Market Reaction

Gold prices have seen upward momentum following the release of the dire jobless claims data along with massive declines seen in manufacturing and housing starts. Spot gold last traded at $1,724.20/oz, up 0.45% with a high of $1,738.46/oz and a low of $1,713.20/oz. Gold prices found support well above the $1,700 mark following yesterday’s volatile trading activity that saw wild price swings unconnected to financial news reports.