Around 1.8 million Americans filed for first-time jobless benefits last week, hinting that the worst could be over for the labor market.
While still a staggering figure, it continues a downward trend for the unemployment claims that have illustrated week by week the devastating impact of the coronavirus pandemic.
The jobless claims data, released Thursday by the Department of Labor, was in line with economist expectations of 1.8 million for the week ended May 30.
The stock market traded lower in premarket activity Thursday morning after the figures were released. All three major averages have notched up gains over the past week as confidence mounts that the gradual reopening of the economy will spur consumer spending and get the country back on track.
Monthly employment data from private payroll processor ADP on Wednesday showed a total of 2.76 million people lost their job in May, a number far lower than the predictions of 8.75 million.
Most of those jobs came from the service industry, with 1.9 million positions lost, according to ADP.
May’s figure is “obviously an awful number, but not as catastrophic as expected,” said Mark Zandi, chief economist at Moody’s Analytics.
After businesses and schools across the country were shut down in mid-March to halt the spread of the coronavirus, unemployment soared to record levels, hitting a record 6.8 million in late March.
The weekly and monthly totals continue to reflect the impact of the government’s multitrillion-dollar stimulus package, which expanded eligibility for unemployment benefits to self-employed workers and “gig workers” such as rideshare drivers.
The CARES Act also ramped up the weekly unemployment insurance benefit to a more generous amount, which Federal Reserve Chairman Jerome Powell said has led to “challenges in bringing employees back to work.”
Additionally, the continued closure of schools has meant some employees who wish to return to work are not able to do so. Many workers remain cautious about going back to work amid a public health crisis.
Attention now turns to Friday’s closely watched monthly employment report, which is expected to show that a total of 8 million Americans were out of work in May. That number is markedly lower than April’s record tally of 20.5 million.
The current unemployment rate of 14.7 percent, the highest since the Great Depression, is expected to soar to around 20 percent.