The state of employment in the U.S. will take centerstage Thursday when the U.S. Labor Department releases its weekly jobless claims report.
Economists anticipate another 1.84 million Americans filed for unemployment benefits in the week ending May 30 from 2.12 million in the prior week. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance.
Continuing claims, which lags initial jobless claims data by one week, is expected to total 20.05 million in the week ending May 23, down from 21.05 million in the previous week.
Economists believe that last week’s jobless claims report might have signaled a turning point for unemployment in the U.S.
“[Last] week’s jobless claims data contains more good news than bad. Continuing claims for the week ending May 16 fell by 3.9mn, to 21.052mn, leading to a drop in the insured unemployment rate to 14.5%, from 17.1% previously,” Barclays outlined in a note to clients May 29. “This likely signals that the hiring rate accelerated and is broadly consistent with our outlook for a near-term peak in the unemployment rate in May, followed by declines thereafter.”
The weekly initial jobless claims report comes on the heels of the ADP private employment report and ahead of the highly-anticipated May jobs report, which is set to be released Friday morning.
ADP’s report showed that the U.S. economy lost 2.76 million private payrolls in May, which was significantly fewer than estimates for 9 million job losses during the month.
“The ADP report isn’t always a reliable predictor of the BLS data, but it suggests that the pace of job loss moderated noticeably between April and May, even though it remained substantial relative to pre-COVID-19 norms. This is a message broadly consistent with some other related signals, and the labor market likely has benefitted from the easing of restrictions on activity in many places in recent weeks,” JPMorgan said in a note Wednesday.
Read more: US economy shed 2.76 million private payrolls in May: ADP
Economists anticipate another historic decline in employment in May with the pace of layoffs significantly outpacing rehiring. The U.S. economy is estimated to have lost 8 million nonfarm payrolls, down from 20.54 million job losses in the prior month. The unemployment rate likely skyrocketed to nearly 20% during the month, up from 14.7% in April.
“In reality, the shadow unemployment rate, which includes people absent from work for other reasons, is much higher,” Morgan Stanley wrote in a note Wednesday. “There is considerable uncertainty as to how high the shadow unemployment rate could be due to compositional and categorization noise. For example, some people that were absent from work for other reasons are counted as employed, but are presumed to be unemployed. The Bureau of Labor Statistics could re-categorize this at any time, which could life the unemployment rate to as high as 25%, in our view.”
As of Wednesday afternoon, there were 6.42 million coronavirus cases and 381,000 deaths worldwide, according to Johns Hopkins University data. In the U.S., there were 1.8 million cases and 106,000 deaths.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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