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U.S. Jobless Claims Steady In June 20 Week

The number of workers seeking jobless benefits has held steady at about 1.5 million each week so far in June, signaling a slow recovery for the job market as states face new infections that could impede getting people back to work.

Applications for unemployment benefits were slightly below 1.5 million last week, at 1.48 million the Labor Department reported Thursday. While weekly totals have gradually eased from a late March peak of nearly 7 million, they also remain well above the prepandemic record of 695,000 in 1982.

Meanwhile, the number of people receiving benefits, an indicator for overall layoffs, was 19.5 million in the week ended June 13, down slightly from previous weeks.

Economists say the sluggish improvements in claims tallies lower prospects for a quick recovery. Further, a recent increase in coronavirus cases could affect efforts to reopen the economy and get people back to work.

“We’re seeing a slowdown in layoffs, but hiring hasn’t picked up a tremendous amount,” said Nick Bunker, economist at the job site Indeed. “The recovery from this is going to potentially be a very long slog if we can’t get the virus under control quickly.”

States where the coronavirus is spreading the most are experiencing a slowdown in economic activity, according to Jefferies. The number of hours worked at small businesses hit its most recent peak in mid-June and has since dropped off in places like Texas and Arizona, according to scheduling and hiring software provider Homebase.

“It is clear that the public is not psychologically immune to Covid-19, and will retrench as the virus starts spreading again, regardless of government restrictions,” said Aneta Markowska, Jefferies economist.

Apple Inc. last week said it would close nearly a dozen stores in four states and Wednesday said it would shut seven more in the Houston area, where cases have doubled so far this month. Walt Disney Co. said it would postpone the scheduled reopening of its park in Anaheim, Calif., which had been set for July 17.

Macy’s Inc. is laying off roughly 3,900 corporate staffers as the retailer, like other businesses, confronts a slow recovery.

The claims trend mirrors shifts in other segments of the economy, indicating conditions have improved since hitting a low earlier in the crisis but have much ground to regain.

For instance, new orders for durable goods — products designed to last at least three years — increased 15.8% in May from the previous month. But the rebound in overall orders wasn’t enough to make up for March and April losses. In dollar terms, new orders registered at levels last seen in 2010, according to Commerce Department data released Thursday.

New orders for nondefense capital goods excluding aircraft — a closely watched proxy for business investment — advanced only 2.3%.

Separately, the Commerce Department in an updated report said the U.S. economy’s first quarter 5% contraction was unchanged at a seasonally and inflation-adjusted annual rate. Economists project that the second quarter, which ends next week, will see the biggest quarterly economic contraction in records dating back to 1947.

The Labor Department will publish data on June hiring next week. Employers added to payrolls in May. Still, overall employment was down by about 20 million compared with February.

“There’s still this two tracks of this ongoing hemorrhaging of jobs while we also see a lot of people getting rehired,” said Heidi Shierholz, senior economist at the Economic Policy Institute.

Some policy makers pointed to strong job growth in May as evidence the federal government doesn’t need to extend an extra $600 in weekly unemployment benefits, which are slated to expire at the end of next month. That $600, which comes in addition to benefits provided by states, was included in a federal stimulus package to help laid-off workers weather the crisis.

Earlier this week, new findings from the Brookings Institution concluded that states with more-generous unemployment benefits experienced faster recoveries, including greater rehiring and fewer layoffs.

On the other hand, the Congressional Budget Office projected extending the extra $600 in benefits through next January would lead to a decline in employment for the remainder of this year and all of next.

The government also expanded unemployment benefits to include those who were previously ineligible for such aid, such as self-employed and gig-economy workers. Last week, 728,000 people sought benefits through that federal program, which are tabulated separately from regular state claims.
Source: Dow Jones

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