The weekly report on jobless job applications released Thursday by the Labor Department follows dismal data on Wednesday showing a record drop in retail sales in March and the largest drop in industrial production since 1946. Economists predict the economy, which they say is already in recession, contracted in the first quarter at its fastest pace since the Second World War.
Weekly jobless claims, the most recent data on the health of the economy, are being closely monitored to get clues to the depth of the recession, when layoffs may end and when a recovery may begin.
“The fact that 22 million people have applied for unemployment benefits in just four weeks shows that the job market has entered a traumatic period,” said Lydia Boussour, senior American economist at Oxford Economics in New York.
Initial claims for unemployment benefits fell from 1.370 million to 5.245 million seasonally adjusted for the week ended April 11, the government said. Data for the previous week have been revised to show that 9,000 more requests were received than previously, bringing the total for this period to 6.615 million. A total of 22,034 million people have filed for unemployment benefit since March 21.
The Labor Department said the coronavirus epidemic “continues to have an impact on the number of initial applications.” Economists are divided over whether the second consecutive weekly decline in claims suggests that filings reached a record 6.867 million in the week ended March 28, or that state employment offices overwhelmed were unable to handle the flood of requests.
“We anticipate claims will remain very high in the coming weeks as states struggle to clear arrears and more companies are laying off workers in response to the closure,” said Joseph Briggs, economist at Goldman Sachs. At New York.
“Including this week, we are currently forecasting 20 million more unemployment claims until the end of May, after which we expect new claims to fall to levels consistent with previous recessions.”
US stock index futures jumped as investors focused on the second straight weekly drop in receivables. The dollar .DXY was higher against a basket of currencies. The prices of the US Treasury have gone up.
State and local governments have issued “stay at home” or “place of refuge” orders affecting more than 90% of Americans to control the spread of COVID-19, the respiratory illness caused by the virus, and halting suddenly the economy activity. Retail sales and factory production fell in March.
Economists estimate the economy contracted by 10.8% in the first quarter, which would be the sharpest drop in gross domestic product since 1947. They say a historic budget package of $ 2.3 trillion , which provided for cash payments to certain families and increased unemployment benefit checks will likely provide little cushion for the economy.
Economists say the economy went into recession in March.
The National Bureau of Economic Research, the private research institute considered to be the arbiter of American recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it is looking for a drop in activity, spread across the economy and spanning more than a few months.
The claims report on Thursday also found that the number of people continuing to receive benefits after a first week of assistance increased by 4.530 million to a record 11.976 million in the week ending April 4.
So-called continuous claims data is presented with a week lag and is considered a better measure of unemployment. Economists predict that the unemployment rate in April will exceed the 10.0% peak of the Great Recession and that the post-World War 10.8% peak hit in December 1982.
Report by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
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