while continuing claims fall
Initial claims for unemployment insurance were essentially unchanged on the week in the week ended October 31, at 738,000 after 739,000 before seasonal adjustment or 751,000 after an upwardly-revised 758,000 (had been 751,000) after seasonal adjustment. Pandemic unemployment assistance claims were slightly higher on the week at 363,000 after 359,000; PUA claims are only available in non-seasonally-adjusted form. Initial claims are down from the spring when the U.S. shed millions of jobs each week as the economy was shutting down, but claims are still extremely high; they were running just over 200,000 in October 2019. Large numbers of U.S. businesses that delayed reducing headcount earlier in the pandemic, or who temporarily furloughed workers, are now making permanent job cuts.
The insured unemployment rate fell to 4.7 percent before seasonal adjustment or 5.0 percent after seasonal adjustment in the week ended October 24, with the level of insured unemployment down to 6.952 million from 7.490 million before seasonal adjustment or 7.285 million from 7.823 million after seasonal adjustment. The insured unemployment rate is not the same as the unemployment rate that will be released tomorrow, which covers all workers and not just those eligible for unemployment insurance benefits-the insured unemployment rate was 1.0% in October 2019 when the regular unemployment rate (the one calculated from the household survey) was 3.6%.
Some of the decline in insured unemployment is because large numbers of UI recipients are exhausting their benefits, which in most states are limited to 26 weeks. In the latest data for Pandemic Emergency Unemployment Compensation and the state extended benefit programs, which is for the week of October 17, beneficiaries of these programs increased 450,000 on the week. But the number of claimants for other UI programs fell more, and the total number of persons claiming benefits in all UI programs still was down in the week ended 10/17, to 21.509 million from 22.662 million in the week ended October 10.
The drop in continuing claims for UI benefits is consistent with another large increase in employment in the October jobs report. PNC forecasts a 900,000 increase in nonfarm payroll employment in tomorrow’s release of the October Bureau of Labor Statistics Employment Situation Summary with the unemployment rate down to 7.5 percent from 7.9 percent in September. This would have been a blowout jobs report in 2019, but relative to the bounce back in mid-2020 it now would represent a large slowdown in the pace of the recovery, especially since employment in the U.S. still is almost 11 million lower than before the crisis. And the continued high level of initial and PUA claims shows that many American workers are still losing jobs despite the job market adding jobs on net.
Furthermore, the worsening of the pandemic in much of the United States increases the risk that governments will be forced to re-impose restrictions on congregate businesses like bars and restaurants to prevent the health system from being overwhelmed. This is already happening in Europe, where the U.K. and most of the E.U. re-entered some form of lockdown in the last two weeks as per-capita case counts rose to higher levels than in the U.S. PNC forecasts additional job gains through the end of 2020 and into 2021, lowering the unemployment rate to around 6 percent by the end of next year, but the pandemic is a large downside risk-one that is much more immediate (though less headline-grabbing) than election uncertainty.
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