WASHINGTON (Reuters) – Millions more Americans likely sought unemployment benefits last week, suggesting a broadening of layoffs from consumer facing industries to other segments of the economy and could remain elevated even as many parts of the country start to reopen.

FILE PHOTO: People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, U.S. April 6, 2020. REUTERS/Nick Oxford

The Labor Department’s weekly jobless claims report on Thursday will probably reinforce economists’ views of a protracted recovery of the economy, which is reeling from nationwide lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.

The economy shrank in the first quarter at the steepest pace since the Great Recession from 2007-2009. The weekly claims report would follow news on Wednesday that private payrolls fell by a record 20.2 million in April, which set up the overall labor market for historic job losses last month.

“Even with the economy slowly starting to reopen, the number of unemployed should continue to rise sharply as governments, as well as businesses that have tried but not succeeded at holding the line, are now laying off workers,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.

“The pace of new claims for unemployment is slowing, but remains at levels unimaginable just a few months ago.”

Initial claims for state unemployment benefits likely totaled a seasonally adjusted 3.0 million for the week ended May 2, according to a Reuters survey of economists. That would be down from 3.839 million in the prior week and mark the fifth straight weekly decrease in applications since hitting a record 6.867 million in the week ended March 28.

Last week’s filings would lift the number of people who filed claims for unemployment benefits to about 33.3 million since March 21, roughly 22% of the working age population.


The claims report will have no impact on the Labor Department’s comprehensive employment report for April, which is scheduled to be released on Friday, as it falls outside the period during which the government surveyed establishments and households for its monthly report.

Still, jobless claims totaled 26.5 million through the week of April 12. Economists, however, cautioned that this would not necessarily translate into a similar number of job losses in the government’s closely watched employment report.

“We have to remember that there is evidence to suggest there were delays for people registering, with discussion of jammed phone lines and websites crashing under the traffic,” said James Knightly, chief international economist at ING in New York.

“Offsetting this there may have been people who filed more than one claim in confusion while other people may have found work in the grocery and parcel delivery sectors.”

Some companies like Walmart (WMT.N) and Amazon (AMZN.O) are hiring workers to meet huge demand in online shopping. There is also demand for truck drivers as well as workers at pharmacies, supermarkets and courier companies.

According to a Reuters survey of economists, nonfarm payrolls are forecast to have plunged by a historic 22 million in April, which would blow away the record 800,000 dive seen during the 2007-2009 recession. Employment dropped by 701,000 jobs in March, ending a record streak of gains dating to September 2010.

The unemployment rate is seen jumping to 16% in April, which would shatter the post-World War Two record of 10.8% touched in November 1982. In March the jobless rate shot up 0.9 percentage point, the largest monthly change since January 1975, to 4.4%.

April could, however, mark the trough in job losses as more small businesses access their portion of an almost $3 trillion fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries. At least 30 states are partially reopening, which could see some of the unemployed going back to work.

Thursday’s claims report is also expected to show the number of people receiving benefits after an initial week of aid raced to a record 19.905 million in the week ended April 25 from 17.992 million in the week. The so-called continuing claims data is reported with a one-week lag.

“Continuing claims should remain elevated for longer, only peaking once hiring starts to resume more substantially,” said Veronica Clark, an economist at Citigroup in New York. “This will likely occur sometime in June as reopenings slowly start through May. More substantial increases in employment in monthly job figures could occur into July and August, but some more-permanent job losses are likely to remain.”

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama


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