The number of Americans applying for unemployment insurance rose to 1.427 million in the week ended June 27, higher than the expected figure of 1 million. Claims have remained above 1 million for 15 weeks in a row. Last week’s figures mark the first time claims have risen beyond expectations since the peak in March.
- Jobless claims came in at 1.427 million vs. 1.48 million the week before and 1.38 million expected.
- A new wave of COVID-19 cases, likely the result of premature reopening procedures, has caused many businesses to shut down once again as a safety measure.
- The US reported 50,000 new COVID-19 cases on Wednesday, a new single-day record.
Jobless claims are falling slower than expected, likely as a result of the efforts to reopen vast portions of the economy while the pandemic was still untamed. Continuing claims, which denotes people receiving benefits after an initial week of aid, rose around 59,000 to to 19.29 million. Claims in Indiana rose by 34,033, while claims in Virginia and Washington rose 7,769 and 8,110. Claims in Oklahoma fell 41,000 last week. The number of people receiving Pandemic Unemployment Assistance (PUA), aimed to help people previously ineligible for aid such as contractors, came to 839,563 vs. 881,242 the week before.
"Blowout" jobs numbers are not new jobs created but people returning to old jobs. This is not surprising. Seeing the jobless claims at 1.4m continued claims still at 19m is very concerning. Look at the best sectors this month confirms people returning to $17-$22 an hour jobs pic.twitter.com/3Ld7crWpRx
— Thomas Thornton (@TommyThornton) July 2, 2020
The Bureau of Labor Statistics released the June jobs report earlier today, revealing that the unemployment rate is down to an estimated 11.1% with 4.8 million new jobs in June compared to just 2.9 million expected. It’s worth noting that the report covered the period directly preceding the new wave of COVID-19 cases now sweeping the US.
Areas like Texas, California, and Florida, which were among the earliest to reopen, are now having to freeze or roll back their reopening measures. Some of the people filing for claims in those areas are losing their jobs for the second time in the last few months as the nation continues to struggle to suppress the pandemic.
Morgan Stanley wrote “Data on jobless claims remains noisy at this point due to processing lags, but the fact that cumulative jobless claims over recent weeks are implying a considerably higher level of continuing claims, compared with reported continuing claims data that has been broadly flat over the past four weeks, suggests a high level of churn in the labor market continued through June.”
Bank of America wrote a note saying “The stubbornly high [jobless claims] numbers suggest the job market is still under pressure. We expect nonfarm payroll growth to accelerate modestly to 2.8mn in June, following the 2.5mn gain in May. Sending a message of caution are jobless claims and small business surveys which suggest NFP could be at or below May's pace.”
Gold prices have ticked downward in today’s session, perhaps a natural pullback from the 8.5-year high seen earlier this week. Spot gold last traded at $1,768.99/oz, down -0.09% with a high of $1,774.22/oz and a low of $1,758.84/oz. Gold prices are likely reacting to the ongoing wave of new coronavirus cases sweeping the US and causing more businesses to close their doors, creating risk-averse sentiment in the markets.