On Thursday, the weekly jobless claims report is due. After surging in March amid the coronavirus spread, the report gathered attention. Analysts at TD Securities expect initial jobless claims to show a decline by more than 1 million this week, with the level still signalling dramatic weakening in the labour market.
Key Quotes:
“The data suggest upside risk to our 13.0% Q2 forecast for unemployment, although we suspect some of the newly jobless will drop out of the labor force in the official data. The unemployment rate only includes individuals who say they have actively looked for a job in the past month.”
“Google search activity suggests that jobless claims have passed their apex, with the level still extraordinarily high. We forecast a drop to 5.0mn from 6.6mn this week. We estimate an extra 14.5 million claims relative to the previous trend over the last three weeks, equivalent to 8.8% of the labor force. That number will rise to 19.1mn, or 11.6% of the labor force, if our forecast for the upcoming week is realized.”
“The continuing claims and the insured unemployment rate series lag by a week relative to the new claims data, and they have probably been held down by processing delays, but they have begun to surge as well. At 5.1%, the insured unemployment rate in the week of March 28 was up from 1.2% two weeks earlier. The unemployment rate in the employment report is always higher than the insured rate as not all of the unemployed receive unemployment benefits. The differential between the two measures averaged 2.5 points in 2019 (3.7% versus 1.2%).”
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