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US Initial Claims Dips Further

The rate of initial claims growth in the US slowed further in the May 9 week as backlogs are worked down, but there is no indication that the number of people receiving benefits will be pulling back anytime soon.

The Labor Department reported Thursday that initial claims fell by 195,000 to 2.981 million in the current week, above the 2.500 million level expected, but the sixth straight decline after the initial surge. The total number of new claims filed since the start of the COVID-related shutdowns eight weeks ago has reached 36.5 million. 841,995 workers filed under Federal Pandemic Unemployment Assistance on an unadjusted basis, down 160,611 from the 1,002,606 reported in the previous week.

Unadjusted claims fell by 241,467 in the current week on declines in Texas (-102,263) and California (-102,229) but claims in Connecticut jumped by 262,542. New York, the hardest hit by COVID-19, reported 5,265 more claims in the most recent week.

Continuing claims, the total number of people currently receiving benefits, rose by only 456,000, the slowest increase since the start of the crisis. The level hit at a record 22.833 million in May 2 week, lifting the insured rate to 15.7% from 15.4% in the previous week. Until those receiving benefits are rehired, the level of insured unemployment will remain high.

In other data released Thursday morning, import prices fell by 2.6% in April, and were still down 0.5% without a 31.5% drop in energy prices.

Analysts had expected overall import prices to fall by 3.0% after this week’s inflation reports confirmed that energy prices plunged even further in the month. Petroleum prices fell by 33.0%, while crude prices fell 37.5%.

Import prices also declined for foods, feed and beverages, industrial supplies outside of fuels, and consumer goods. Prices are likely to remain low until US demand for foreign products picks up. Overall import prices now stand 6.8% below their year-ago level, while prices excluding fuels were down 1.0% year/year.

Import prices from China rose by 0.1%, but prices from Canada plunged by 10.2%. Prices from the other major trading partners were generally lower.

Reported at the same time, export prices fell by 3.3% in April and were still down 3.3% when a 3.1% drop in agricultural export prices is excluded.

Colin Lambert

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