The U.S. labor market experienced another wave of first-time unemployment claims last week, indicating layoffs are continuing at a high rate even though some states are reopening their economies.
The Labor Department reported Thursday that 2.44 million Americans filed for first-time benefits in the week that ended May 16, bringing the total to some 38.6 million workers in the nine weeks since the coronavirus-induced lockdown has closed large parts of the U.S. economy.
Economists surveyed by Dow Jones had been expecting 2.4 million claims last week.
Claims have declined for seven straight weeks after peaking at 6.9 million in the final week of March but unemployment has soared to the highest level since World War II.
“Net, net, the states may be opening back up, but the labor market is still closed for millions across America and the loss of the income and spending of those without jobs will be a considerable headwind for this economic recovery,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
All 50 states have lifted some restrictions imposed during what was effectively a nationwide lockdown, but according to MarketWatch, “the effort to reopen the economy has been slow going.”
“The U.S. is in a race for time: The longer it takes to fully reopen, the more likely that millions of seemingly temporary job losses become permanent,” MarketWatch said. “If that happens, the jobless rate is likely to remain above 10% through the end of the year and hinder a recovery.”
Jobless claims have averaged just above 3 million over the past four weeks. In the years before the pandemic, the weekly unemployment numbers were around the 200,000 level.
Counting the 1.1 million claims filed through the federal government’s temporary Pandemic Unemployment Assistance program, new jobless claims totaled a much higher 3.3 million last week. The program provides benefits to independent contractors, the self-employed and gig workers.
“The key point here is that the trend is rising strongly, signaling that most of the people who have been laid off due to [the COVID-19 pandemic] remain unemployed,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics.