New US unemployment claims reached 1.9m last week
despite rate of increase slowing
‘The figures are so high that it’s hard to grasp the
reality’
New filings
down for ninth consecutive week
Dominic Rushe
in New York
@dominicru
Thu 4 Jun
2020 13.31 BSTLast modified on Thu 4 Jun 2020 16.22 BST
Another 1.9
million Americans filed for unemployment benefits last week as the total number
of claims passed 42 million since the coronavirus pandemic hit the US.
The pace of
layoffs has slowed dramatically from its peak of 6.6m at the start of April as
states start to relax quarantine orders and last week was the ninth consecutive
week of declines. But the scale of layoffs remains staggeringly high. In the
worst week of the last recession “just” 665,000 people filed for unemployment.
Jason Reed,
professor of finance at the University of Notre Dame’s Mendoza College of
Business, said the numbers may be coming down, but “this is unprecedented. The
figures are so high that it’s hard to grasp the reality.”
On Friday
the labor department will release May’s monthly jobs report. Economists are
predicting unemployment will rise to close to 20% from 14.7% in April and some
8m more jobs will have been lost after a combined drop of 21.4m in March and
April.
At 20% the
official tally would mean one in five Americans in the workforce are now out of
work. The layoffs have disproportionately hit African Americans, Latinos and
those without a college education.
On
Wednesday ADP, the US’s largest payroll supplier, said private sector companies
had shed 2.8m jobs in May, a huge number but far less than the 8m analysts had
expected.
The news
cheered Wall Street and was taken by some as a sign that people were now
returning to work after the lockdowns. But the report also contained worrying
signals about future losses. Losses in leisure and hospitality jobs dropped
sharply to 105,000, down from 7.5m in April, but there were large job losses in
trade and transport (down 826,000 jobs) and manufacturing (down 719,000 jobs).
The Bureau
of Labor Statistics is currently reassessing its measurements and Morgan
Stanley economists warned this week that the “shadow” unemployment rate – which
includes people not currently picked up by the official government figure – may
be 25%.
“In
reality, the shadow unemployment rate, which includes people absent from work
for other reasons, is much higher,” Morgan Stanley wrote in a note.
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