U.S. Initial Jobless Claims Total 2.98 Million in Latest Week

(C) Reuters.

By Noreen Burke

Investing.com – The number of Americans applying for initial unemployment benefits totaled 2.98 million in the week ending May 9, the U.S. Labor Department said Thursday, the smallest number since March but still far from signaling any meaningful turnaround in the labor market.

While it was higher than forecasts of 2.5 million, it was down from 3.17 million in the prior week. Claims have been gradually decreasing since hitting a record 6.86 million in the week ended March 28.

The data underlines economists’ expectations for a third straight month of massive job losses in May and comes a day after Federal Reserve Chair Jerome Powell warned of an “extended period” of weak growth and stagnant incomes as the coronavirus pandemic continues to batter the economy.

Powell noted that the job losses were hitting lower-paid segments of the workforce hardest.

The latest filings bring the total number of people who applied for unemployment benefits to about 36.5 million since March 21, nearly a quarter of the working age population.

The economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression of the 1930s, as businesses were locked down to slow the spread of COVID-19, the respiratory illness caused by the virus.

“We are on the back end of the first wave of layoffs, but now we are transitioning from the natural-disaster phase to the recession phase,” said Josh Wright, chief economist at Wrightside Advisors in New York. “That’s why so many white collar jobs are still being lost. We effectively amputated a large section of the economy, and we are going to limp along afterwards.”

Continuing claims, which show the number of people receiving benefits after an initial week of aid increased to a new record of 22.83 million in the week ended May 2, the report said, up from 22.37 million a week earlier.

Continuing claims data is reported with a one-week delay.

“We would expect a peak should arrive sometime in late May or June, with continuing claims falling as rehiring resumes,” said Andrew Hollenhorst, an economist at Citigroup in New York. “The speed of the decline will indicate how fast rehiring is occurring.”

–Reuters contributed to this report