The weekly survey of Jobless Claims failed to indicate any turnaround in the labor market on Thursday. Initial claims for unemployment benefits were more than expected, and those continuing to receive benefits once again jumped to an all-time high.
This week is the survey week for Nonfarm Payrolls, meaning the report has implications for the official statistics released the first week of June.
The Dept. of Labor said 631,000 people filed for first-time unemployment benefits in the week ending May 16, compared to an upwardly revised 643,000 is the previous week. Analysts were expecting claims to fall to 625k.
“It is a widely accepted view that claims will remain elevated in the coming months due to, among other things, auto sector shutdowns,” said Jennifer Lee from BMO Capital Market just before the release. “Continuing claims remain an important indicator to judge how much higher the jobless rate will climb and when the recession will end.”
Continuing Claims climbed 75k for the week ending May 9 to 6.662 million, a new all-time high. The rise indicates that those losing their jobs are finding it extremely difficult to regain employment.
Ian Pollick from TD Securities said the continuing claims figure “screams loud and clear that job destruction continues to outpace job creation.” He added, “It is safe to say that until U.S. economic activity begins to pick up, the level of continuing claims will likely continue to increase, at least in the near-term.”
Looking ahead, Joseph LaVorgna from DeutscheBank said initial claims could hit 700k in the coming weeks as shutdowns from the auto sector are captured in the data.
Translating the current report into a Nonfarm Payrolls forecast, LaVorgna said to expect another half-million jobs vanish in May.