US jobless claims climb by another 1.5 million amid coronavirus

About 1.5 million laid-off workers applied for US unemployment benefits last week, a historically high number, even as the economy increasingly reopens and employers bring some people back to work.

The latest figure released by The Labor Department, marked the 11th straight weekly decline in applications since they peaked at nearly seven million in March as the coronavirus shut down much of the economy and caused tens of millions of layoffs. 

The decline was much smaller, though than in recent weeks, falling just 58,000.

The total number of people receiving unemployment aid also fell slightly, reflecting the return of many to their old jobs.

Read more: US new weekly jobless claims seen falling below two million

Uncertainty about job market 

Still, analysts had expected a sharper decline in weekly applications, and some expressed disappointment that so many people are still seeking unemployment benefits even as restaurants, gyms and many categories of retail shops are reopening across the country.

"It does seem like there are many new people filing for unemployment, and this is worrisome when we are three months into the crisis and you are starting to see re-openings across the nation," said Gregory Daco, chief US economist at Oxford Economics.

Such a huge flow of people in and out of work, and the uncertainty surrounding it, make it hard to track where the job market is headed, Daco said.

The economy fell into recession in February.

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Not in official count 

Thursday’s report also showed that an additional 760,000 people applied for jobless benefits last week under a new programme for self-employed and gig workers that made them eligible for aid for the first time. 

These figures aren't adjusted for seasonal variations, so the government doesn’t include them in the official count.

A total of 29.2 million people were receiving unemployment benefits under all programmes during the week ending May 30, the latest available data shows, down from 29.5 million in the prior period.

Reopening economy amid virus

Other recent reports have been more encouraging and suggest that the lifting of shutdown orders has sparked some pent-up demand from consumers, whose spending largely drives the economy. 

Most economic gauges remain far below their pre-pandemic levels, though, and some analysts question whether the recent gains can be sustained, especially if the virus were to surge back.

From manufacturing, retail, information technology and oil and gas production, companies have announced job cuts. State and local governments, whose budgets have been shattered by the Covid-19 fight, are also cutting jobs.

Potential recovery

The economy and the job market face a raft of uncertainties that could slow or even derail a recovery. Business reopenings have caused spikes of viral infections in nearly half of states, a trend that could lead consumers to pull back again on shopping and dining out and reverse any economic gains.

Restaurants, bars, gyms and movie theatres will likely rehire only a portion of their workforces. Many consumers won’t fully resume their previous habits of shopping, travelling and going out until a vaccine is available.

“Recently, some indicators have pointed to stabilisation, and in some areas a modest rebound, in economic activity," Federal Reserve Chairman Jerome Powell said on Tuesday in a testimony to a Senate committee. 

Yet "until the public is confident that the disease is contained, a full recovery is unlikely."

Read more: US Fed forecasts no policy rate hike through 2022