But Continuing Claims Rise

Initial claims for unemployment insurance fell for a ninth straight week in the week ending May 30, to 1.877 million, from 2.123 million the previous week (revised up by 3,000). Initial claims peaked at almost 7 million at the end of March, and are down by 73 percent since then. However, claims are still well above their early March level of around 200,000, and are more than double their pre-Viral Recession peak of around 700,000. 

Continuing claims rose to 21.487 million in the week ending May 23, from 20.838 million the previous week. Although claims rose for the week, they are down from their peak of 24.912 million the week ending May 9. 

Layoffs have slowed dramatically since the end of March as states have gradually lifted restrictions on movement and economic activity has picked back up. And the decline in continuing claims in mid-May, even with the increase the week ending May 23, suggests that job gains as businesses restart may be outweighing job losses, and that net monthly job growth could resume in June. 

The May jobs report from the Bureau of Labor Statistics, to be released Friday June 5, is likely to show job losses of around 8.5 million, based on the pattern in unemployment insurance claims from mid-April to mid-May. However, May private-sector job losses based on data from payroll-processing firm ADP were 2.76 million, much less than the consensus estimate of 9 million, suggesting that May job losses in the BLS report could be smaller than expected. PNC expects the unemployment rate to jump to 19.3 percent in May from 14.7 percent in April; this would be the highest unemployment rate since the Great Depression. The unemployment rate will decline steadily in the second half of 2020 as economic activity resumes, but will remain elevated over the next couple of years.