Initial jobless claims saw a slight reduction in the week ended June 13, failing to match expectations. 1.51 million Americans applied for unemployment benefits last week vs. 1.57 million the week before (upwardly revised). The figures represent a big miss in forecasts, with economists anticipating only 1.29 million claims last week. The 58,000 drop in claims was the smallest drop since early April when claims began to tick downward.
- Initial jobless claims came in at 1.51 million for the week ended June 13 vs. 1.57 million the week before and 1.29 million expected.
- The decline in claims was the smallest drop since early April when claims started falling from the peak hit in March.
- Continuing claims fell to 20.5 million vs. 19.9 million expected in the week ended June 6.
The latest jobless claims figures disappoint those expecting faster progress associated with the gradual reopening of the US economy which began in May. While some areas of the economy have recovered faster than expected, the collapse of the labor market remains foremost in the minds of market analysts, and Americans in general. Despite increased payrolls in May and rising spending last month, 20.5 million Americans were on unemployment benefits by the last tally in early June.
Continuing jobless claims.. can you indicate me where’s the v-shaped recovery? pic.twitter.com/8nbb7ndnm4
— Alessio Urban (@AlessioUrban) June 18, 2020
Unadjusted continuing claims rose 26,000 to 18.7 million, while unadjusted initial claims fell 128,000 last week. Unadjusted claims in California rose by almost a quarter of a million last week, while Oregon new claims 144,000 new claims and Texas reported 110,000. Additionally, states registered over 760,000 initial claims last week for Pandemic Unemployment Assistance, a program providing aid to self-employed contractors and other workers not typically eligible for standard unemployment insurance.
Roiana Reid, an economist at Berenberg Capital Markets, said “You’re going to see elevated levels of layoffs because some businesses will permanently close,” she said. “But hiring and rehiring will outweigh that this summer, especially as you see big cities, such as New York, reopen.”
Federal Reserve Chair Jerome Powell told lawmakers this week that “significant uncertainty remains about the timing and strength of the recovery.”
Meanwhile, chief U.S. economist at TS Lombard, Steven Blitz, said “People will say claims are coming down, but for an economy that is reopening, that is a huge number. The economy is losing workers and employment beyond the initial impact tied to businesses that shut down. There are a lot of industries that are getting hurt and that’s starting to cascade down, that is what those numbers are showing.”
Gold prices saw some selling pressure following the release of the jobless claims news, along with an upbeat manufacturing report released at the same time. However, the precious metal pared losses further into the session. Spot gold last traded at $1,725.11/oz, down -0.15% with a high of $1,736.44/oz and a low of $1,718.90/oz. The Philadelphia Fed manufacturing index rose 60 points unexpectedly in June, reaching positive territory at 27.3 and smashing expectations of a negative -23.0 reading.