But Still Above 2 Million; Decline in Continuing Claims a Glimmer of Hope

Initial claims for unemployment insurance fell for an eighth straight week to 2.123 million in the week ending May 23, down 323,000 from the previous week. Claims for the week ending May 16 were revised up by 8,000 to 2.446 million.

After peaking at an all-time high of 6.867 million in the week ending March 28, claims have fallen steadily, down more than two-thirds from their peak. Still, the labor market continues to suffer the incredibly damaging effects of the coronavirus pandemic and public health response. In early March, before states put restrictions on movement, claims were running at a pace of 200,000 to 220,000 per week, so initial claims are still running at ten times that pace. And before the Viral Recession, the previous all-time high for claims was about 700,000 in 1982.

Continuing claims for the week of May 16 fell to 21.052 million, down by 3.860 million from the previous week. This was the first drop in continuing claims since late February, before the crisis started. The drop in continuing claims is a positive, indicating that more people left the UI system than entered, suggesting that job gains exceeded job losses over the week.

Layoffs continue at a massive scale, according to the latest unemployment insurance report, but it may be that the job market is nearing a turning point. Initial claims, while still above 2 million in the week ending May 23, continue to decline as layoffs abate. And the decline in continuing claims for the week ending May 16 suggests that job gains, as businesses reopen, may be outpacing job losses. Still, PNC expects reported job losses of 8.5 million in the May employment report, to be released Friday June 4. This would mean total job losses of about 30 million in March through May, or about 20 percent of employment. The May unemployment rate will be about 19 percent, the highest rate since the Great Depression.