claims show much more severe joblessness than the unemployment rate suggests

Initial claims for unemployment insurance rose on the week in the last week of March, but the trend is still lower.

Initial claims for unemployment insurance rose 61,000 to 719,000 in the week ended March 27 in seasonally-adjusted terms. Claims in the prior week were revised down 26,000 to 658,000 from 684,000 in the prior release. The four-week moving average of initial claims—a good measure of the trend that filters out week-to-week noise—dipped to 719,000 from 729,500 in the prior week. Initial claims for Pandemic Unemployment Assistance fell 4,000 to 237,000 in the week ended March 27.

Beneficiaries of regular unemployment programs fell 46,000 in the week ended March 20 to a seasonally adjusted 3.794 million; recent months’ decline in insured unemployment reflects both an improvement in the labor market as well as beneficiaries maxing out their unemployment benefits and entering the Pandemic Emergency Unemployment Compensation program (5.5 million weeks claimed in the week ended March 13) or state Additional Benefit programs (1.0 million beneficiaries).

The US economy lost 22 million jobs last spring, then added back millions of jobs each month in the summer and early fall. Job gains slowed over the winter and averaged just 41,000 a month between November and January. Job growth picked up to 379,000 in February, and PNC forecasts further acceleration to 650,000 jobs added in March’s employment report, to be released tomorrow. Even so, unemployment remains very elevated in late March, and the labor market is lagging behind the upbeat news about vaccine distribution.

Today’s claims data show nearly a million initial claims filed under normal and emergency unemployment programs at the end of March. This shows that the labor market is still weaker than February’s 6.2% unemployment rate would suggest; before this crisis, the last time the unemployment rate was at that level was in 2014, when initial claims were running at about 300,000 weekly.

Job growth will accelerated dramatically in coming months as the US reaches herd immunity and the high-contact service sector revives (leisure, hospitality, brick-and-mortar retail, tourism). Even so, PNC does not forecast for payroll employment to recover to its pre-crisis level until 2022. Since the labor force has grown since the pandemic started, the forecast still sees more slack in the labor market next year than before the crisis began.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.