The global novel coronavirus crisis continues to batter the U.S. labour market, with millions more Americans, including white-collar workers, filing for unemployment benefits last week as the hit from the pandemic spills over into a broader swath of the economy.
Initial claims for state unemployment benefits totalled a seasonally adjusted 2.981 million for the week ended May 9, the Labour Department said on Thursday.
While that was down from 3.176 million in the prior week and marked the sixth straight weekly drop, claims remain astoundingly high.
Economists polled by Reuters had forecast applications for unemployment benefits totalling 2.5 million in the latest week.
Claims have been gradually decreasing since hitting a record 6.867 million in the week ended March 28.
The weekly jobless claims report, the timeliest data on the economy’s health, cements economists’ expectations for a third straight month of massive job losses in May.
The report came a day after Federal Reserve Chair, Jerome Powell, warned of an “extended period” of weak growth and stagnant incomes.
“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.’’
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.
Still, April was probably the trough in job losses during this economic downturn, which has also been marked by the sharpest decline in output since the 2007-09 ‘Great Recession’.
In addition to workers in industries and jobs not initially affected by the coronavirus shutdowns, economists attribute the continued elevation in claims to the processing of application backlogs, which accumulated as state unemployment offices were overwhelmed by the unprecedented wave of filings.
Many parts of the country are reopening and states and local governments are laying out plans to restart their economies.
But with businesses and factories operating well below capacity, and fears of the second round of COVID-19 infections, economists do not anticipate a dramatic improvement in the labour market.
Some businesses have accessed loans from an almost $3 trillion fiscal package, which could be partially forgiven if they used the credit for employee salaries.
But many small enterprises are expected to close permanently, leaving some of the 21.4 million people, who lost their jobs in March and April, out of work.