The number of Americans seeking first-time unemployment benefits eased further to 1.5m last week, following an unexpected return to hiring as the US reopens its economy after 12 weeks of coronavirus-related shutdowns.
The seasonally adjusted 1.54m initial jobless claims for the week ending on June 6 were down from nearly 1.9m the week before, according to the US labour department, marking the tenth consecutive weekly decline. Economists polled by Reuters had expected 1.55m claims in the latest week.
The federal Pandemic Unemployment Assistance programme, which extended aid to the self-employed or other individuals who would not qualify for regular unemployment compensation, tallied 705,676 new applications, down from 796,813.
While jobless claims have slowed, the unemployment rate at 13.3 per cent remains at historic levels and above its peak during the 2008-09 financial crisis, highlighting the depth of the coronavirus-fuelled recession and the financial impact for millions of Americans. A total of 44.2m workers have filed first-time unemployment claims since the start of the pandemic.
Continuing claims, which count the number of people actively collecting benefits, fell to 20.9m during the last week in May from nearly 21.3m, accounting for 14.4 per cent of the workforce. The so-called insured unemployment rate, which was 14.6 per cent in the previous week, is considered an alternative measure of joblessness.
Jobless claims have fallen gradually from their peak of 6.9m, and continuing claims are down from a recent high of 24.9m, as people began returning to work and Washington’s $3tn in fiscal stimulus flowed to individuals and small businesses.
Some companies, particularly in ecommerce and logistics, have made thousands of new hires with consumer demand shifting online.
Economists were caught off guard when US employers added 2.5m jobs in May, far better than the 8m lay-offs that were forecast. It marked a sharp turnround from the 20.7m jobs lost in April and 1.4m cuts in March.
The report showed that some of the industries hit hardest by coronavirus shutdowns, such as hospitality, retail and construction groups, had begun hiring workers again.
The Federal Reserve, which on Wednesday predicted it would keep interest rates near zero until at least the end of 2022, estimated an unemployment rate of 9.3 per cent this year and 6.5 per cent in 2021.
“My assumption is that there will be a significant chunk, well into the millions . . . of people who don’t get to go back to their old job . . . there may not be a job in that industry for them for some time,” Fed chair Jay Powell said.