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First Cut: Initial claims continue to ebb while remaining at unprecedented levels

The unadjusted level of new filings for unemployment benefits declined 266,682 to 1.915 million in the week ended May 23. Since the March 21 week, there have been 37.218 million claims filed. The unadjusted number of claims filed has decreased each week since April 11, although the onslaught of applications for benefits remains unprecedented.
Other than the COVID-19 pandemic, the Labor Department cited no special factors in the data. However, the approach of the Memorial Day holiday may be responsible for claims being estimated for a number of states – California, Delaware, Hawaii, Kansas, Maine, Pennsylvania, and Wyoming, and Puerto Rico.

I continue to cite unadjusted data only as the seasonal adjustment factors are meaningless in the present context. Typically at this time of year, school districts and higher education facilities are adapting staffing levels going into the summer months and seasonal adjustment is intended to capture the higher levels of filings.

Ongoing claims were down 3.742 million in the week ended May 16 to 19.052 million. Plans to reopen some businesses as restrictions were lifted meant workers were called back on the job. Also a factor was the availability of paycheck protection funds which meant businesses could put others back on payrolls. The insured rate of unemployment fell 2.5 points to 13.1%, the first step down after the record high in the prior week.

It is too soon to say if overall conditions in the labor market have started to mend. If there is a fresh wave of COVID-19 infections, lock downs on activity could be imposed again. It is also possible that some businesses will not survive the crisis even with assistance and there could be more layoffs in the works.

New filings for Pandemic Unemployment Assistance (PUA) – meant for workers not otherwise covered by unemployment insurance – were down 54,255 to 1.193 million in the week ended May 23. Continuing claims covered under the PUA were up 1.673 million to 7.793 million in the May 9 week. Emergency programs are intended to be short-term to fill the gap of regular unemployment insurance or when regular insurance has reached its limit.

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