As initial weekly UI claims continue to drop and COVID-19 infections rise, concern swells about the impact to the U.S. economy and labor market. The question is whether it will halt momentum gained in the job market the past several weeks as some leaders reevaluate reopening plans. Reintroduction of restrictions could cause the progress to stall, even lingering later into the summer. For the time being, the trend remains a positive one as 4.8 million jobs were added to the economy in June. The June Jobs Report shows positive gains in most areas of the economy.
Seasonally adjusted initial claims were 1.42 million for the week ending June 27, and the totals for the week ending June 20 were revised up by 2,000 to 1.48 million. Continued claims increased by 0.3% from the prior week, to 19.29 million for the week ending June 20. Based on an estimate by LaborIQ® by ThinkWhy, the total of initial and continued claims has dropped by 6.8 million since the peak for the week ending May 9.
Another measure of labor reported by the BLS is the U-6 unemployment rate, which was reported at 18.0% for June.
Some caution is being raised due to increased coronavirus infections. However, signals such as strong consumer confidence (at 98.1, up from 85.9 in May) and a growing June manufacturing index at 52.6%, along with other recent indicators, including home sales and retails sales, hint at the start of a recovery.
Several states are mulling changes to their recent loosening of restrictions, which could impact business’s ability to regain revenue momentum and fill vacant positions as infections rise. Coupled with expiring PPP and supplemental unemployment benefits, changes in regulations related to COVID-19 will be a factor to watch for the rest of this summer. Because of those factors, LaborIQ® by ThinkWhy expects initial jobless claims for July should hover around 7.5 million, slightly above the June total, but well below the peaks earlier in the spring. The key remains whether enough people can be hired and cause the continued claim total to decline and offset the number of initial claims.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, and businesses across the U.S.