Data released on Thursday showed that initial jobless claims reached 3.8 million last week, 603K less than the previous week. Analysts at Wells Fargo see the unemployment rate approaching 20% over the next few months.
Key Quotes:
“Initial jobless claims fell by 603,000 last week, marking the fifth straight drop, but remained agonizingly high at 3.8 million. Since the middle of March, 30.3 million Americans have filed for unemployment insurance. This equates to nearly one out of every five workers losing their job in a little more than a month, and suggests the unemployment rate will at least briefly approach 20% over the next few months.”
“Normally unemployment claims do not translate into an equal number of unemployed in the monthly employment report because the labor market is constantly in flux and many losing a job find a new one. Today, however, with much of the economy shutdown, there are fewer opportunities for displaced workers to find a new job. As a result, a much higher proportion of those losing jobs and filing unemployment claims are likely to show up as unemployed in the monthly data, yielding an unprecedented spike in the unemployment rate.”
“While industry detail is not available, we suspect the trend in layoffs has shifted. The first wave was dominated by displaced leisure & hospitality workers, workers at doctor & dentist offices and administrative positions in general. A larger portion of more recent job losses have likely been in manufacturing, logistics and professional services. The criteria for receiving benefits have also widened to include many contract workers, which may be one reason claims fell less than expected this past week.”
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