Initial claims for U.S. government jobless benefits fell to 1.3 million in the week ended July 11, the lowest level during the pandemic but still a troublingly high level for an economy four months into a global health crisis.
The Department of Labour reported Thursday that the number of new claims fell by about 10,000 from the previous week’s level. The number has fallen for 15 weeks in a row, after claims hit an all-time high of almost seven million in late March, when businesses everywhere were shutting their doors at the outset of the COVID-19 pandemic.
But if more than a million people are still setting up initial jobless claims four months after their sudden spike, it casts doubt on the veracity of any job market recovery.
All in all, the government has processed almost 57 million new claims for jobless benefits since the middle of March. The total number of people receiving jobless benefits fell by 400,000 during the week, but is still stuck at more than 17 million people. That’s about 10 per cent of the U.S. labour force.
The numbers are showing some concerning signs about the job market in places that rushed to reopen their economies. Preliminary data out of Florida and Georgia — two of the earliest states to reopen — suggest there were 62,000 and 31,000 initial claims respectively last week. And continuing claims in those two states are staying high, with the number doubling in Florida to 129,000 and up by one third in Georgia to 136,000.
“Over the past few weeks, numbers of new COVID-19 cases have continued to rise and now stand positioned to threaten state reopening efforts across the entire southern Sunbelt region,” Matthew Eidinger at foreign exchange firm Cambridge Global Payments said.
Self-employed, gig workers about to lose benefits
Case counts are rising in 40 states and 22 states have either paused or reversed their efforts to reopen their economies, according to data from Bank of America.
Worse still, millions of workers are slated to lose their unemployment benefits at the end of this month, when the government stops paying an additional $600 per week to jobless self-employed people, gig workers and contractors who do not qualify for regular unemployment benefits. Which means the official jobless number could go down on paper in August, even as millions more people are actually out of work, with no end in sight.
“Conditions in the labour market remain weak and the risk of mounting permanent job losses is high, especially if activity continues to be disrupted by repeated virus-related shutdowns,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.