Another 3 million Americans expected to have filed for unemployment benefits

Market participants will get another pulse check on the U.S. labor market Thursday morning, as the world continues to grapple with the COVID-19 pandemic and ahead of the highly-anticipated April jobs report at the end of the week.

Another 3 million Americans are expected to have filed for unemployment benefits during the week ending May 2, following 3.839 million initial jobless claims in the prior week. So far over the past six weeks, more than 30 million Americans have filed unemployment insurance claims.

(David Foster/Yahoo Finance)

Continuing claims, which lags initial jobless claims data by one week, is expected to total 19.8 million for the week ending April 25. In the prior week, there were a record 17.99 million continuing claims.

The weekly number of jobless claims has been steadily declining even as the cumulative number remains high.

“Initial jobless claims continued to moderate during the most recent week of data despite remaining at an extremely elevated level,” Nomura economist Lewis Alexander wrote in a note May 1. “Fiscal stimulus and the gradual re-opening of some industries and states should help the labor market stabilize further. That said, considerable strain remains, and we continue to expect the unemployment rate to reach almost 20% in Q2.”

(David Foster/Yahoo Finance)

Certain states got hit harder than others during the week ending April 25 as backlogs continue to get processed. Florida saw the highest number of initial jobless claims at an estimated 432,000 on an unadjusted basis, from 507,000 in the prior week. California reported 328,000, down from 528,000 in the previous week. Georgia had an estimated 265,000 and Texas reported 254,000. 

Thursday’s weekly claims report comes ahead of the Bureau of Labor Statistic’s April jobs report and on the heels of the ADP employment report. Wednesday morning, the U.S. private sector lost 20.23 million jobs in April and was the worst loss going in the report’s history, according to ADP.

“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” ADP Research Institute Co-Head Ahu Yildirmaz said in a statement.

“Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey,” Yildirmaz added.

Though the ADP report is not always a reliable indicator of what the BLS report will illustrate, it does provide a bit of insight into the health of employment in the U.S.

“The report is a bit light on details of any potential methodological problems this month. The ADP counts anyone on the active payroll rather than just people who were paid during the month, which is the official non-farm payroll definition. Within many people put on temporary layoff, that could have created a discrepancy, with those people still on the active payroll, but not counted in the official non-farm payroll figures and also qualifying as unemployed in the other official household survey,” Capital Economics said in a note Wednesday.

Economists polled by Bloomberg expect 21.3 million jobs losses in April when the BLS releases its report Friday morning, down significantly from 701,000 job losses in March. The unemployment rate is estimated to have surged to 16% from 4.4% in the prior month.

“April jobs report should go down in infamy,” Bank of America economists said in a note Wednesday. “The April employment report will reveal unprecedented job losses as the economy has been shutdown to control the spread of COVID-19.” The firm projects 22 million job losses during the month amid the global pandemic.  

One important thing to note with April’s jobs report is that there might be some discrepancies in the two surveys. A furloughed person, who is not working but has not been laid off, will be classified as unemployed or temporarily laid off in the household survey. However, if they were paid at any point during the establishment survey period, they will be classified as employed.

As of Wednesday afternoon, there were 3.6 million confirmed coronavirus cases and 258,000 deaths globally, according to Johns Hopkins University data. In the U.S., there were 1.2 million cases and 71,000 deaths.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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