But Still Double Pre-Pandemic Level

• Initial claims for unemployment insurance fell slightly in the week ending June 19, although the four-week moving average was up for the first time in two months.
• Claims have increased in Pennsylvania in June because of a computer system upgrade.
• The total number of unemployment beneficiaries continues to decline but remains extremely elevated.
• The number of beneficiaries will fall rapidly over the next few months as bonus benefits expire.

Initial claims for unemployment insurance fell by 7,000 in the week ending June 19, to 411,000. This made up only a portion of the large increase in claims (+44,000) in the previous week, which were revised higher to 418,000, from 412,000. Initial claims have fallen in 7 of the past 8 weeks.

The four-week moving average of initial claims, which smooths out some of the volatility, rose by 1,500 in the week ending June 19 to 397,750. This small increase in the moving average was the first since early April, and just the second since late January.

Initial claims jumped from 200,000 per week in early 2020 to more than 6 million in April of last year as the pandemic came to the U.S. They then fell quickly to around 900,000 per week by early August, then stabilized at between 700,000 and 900,000 between August and March. But since the spring claims have steadily fallen to around 400,000 per week. This is still about double their pre-pandemic level, however.

There were initial claims of 105,000 under the Pandemic Unemployment Assistance program in the week ending June 19, up almost 7,000 from the previous week (not seasonally adjusted). Claims under the PUA have risen in recent weeks but are far below the almost 900,000 one year ago.

There were a total of 14.845 million people receiving some form of unemployment insurance in the week ending June 5 (not seasonally adjusted), up about 4,000 from the previous week. Total claims under all programs peaked at 32 million in June 2020 as the pandemic lead to unprecedented job losses and Congress expanded eligibility and increased benefits. Claims have gradually declined since then but are still up dramatically from around 2 million before the pandemic.

Continued claims under regular state UI programs fell to 3.39 million in the week ending June 12, down 144,000 from the previous week. Continued claims rose from 1.7 million before the pandemic to a peak of 23 million in May 2020. They have since fallen to around 3 million. However, with most people receiving benefits via pandemic-related programs, state continued claims have become less important as a labor market indicator.

Initial claims for unemployment insurance fell slightly in the week of June 19, after increasing the previous week, and the four-week moving average rose slightly. Some of the increase in claims over the past couple of weeks has come from Pennsylvania (up almost 37,000 over the past two weeks, not seasonally adjusted), which temporarily shut down its unemployment insurance portal in early June for an upgrade.

Initial claims will continue to decline through the summer as layoffs abate with stronger economic activity and the unemployed find new jobs. The total number of beneficiaries will also decline. About one-half of states have already dropped, or will be dropping over the next few weeks, extra pandemic-related benefits of $300 per week because of concerns that this is discouraging the unemployed from taking jobs. The bonus benefits will expire nationwide in September. This drop in benefits will accelerate movement away from UI and toward employment.

The labor market continues to recover from the Viral Recession. The U.S. economy has added some 14 million jobs since the labor market bottomed out in April of last year, but employment in May 2021 was still some 7.5 million below its pre-pandemic level. With solid job growth through the rest of 2021 and in 2022, PNC expects employment to recover to its pre-pandemic level in the second quarter of next year.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.