As Congress debates how to deal with the end of July deadline for the extended jobless claims program, another 1.416 million initial claims were filed in the July 18 employment survey week, up 109,000 from the level in the previous week, but down from the 1.482 million level in the June 20 employment survey week. Analysts expected a 1.305 million level.
The weekly gain reported Thursday by the Labor Department was the first since the March 28 week at the beginning of the COVID-19 shutdowns. Seasonal adjustment difficulties may have been one factor in the surprise increase, but the level of filings is hard to discount.
The additional $600 per week being paid to claimants is due to expire on July 31, with a disagreement between Republicans and Democrats over whether to extend the program as it is, to extend it with a reduced amount or with some manner of means-testing, or to cancel it entirely.
Unadjusted claims fell by 141,816 in the current week after an increase of 117,682 in the previous week. Seasonal adjustment factors expected a larger decline in the current week, leading to an increase in the seasonally adjusted figure. Usual auto retooling shutdowns are accounted for the July seasonal adjustment pattern, with expected large filing gains early in the month that are reversed at the end of the month. Of course, that is in a typical year, which 2020 is not.
The Labor Department reported that 974,999 workers filed under Federal Pandemic Unemployment Assistance on an unadjusted basis in the current week, up slightly from 955,272 in the previous week.
The level of continuing claims fell by 1.107 million to 16.197 million in the July 11 week, the lowest point since 15.819 million in the April 11 week. The decline suggests rehiring of furloughed workers is ongoing, but the real question is whether those reopened businesses will continue to operate if government assistance runs out.
Released later in the morning, the Conference Board’s leading index rose by 2.0% in June, below the 2.6% increase expected and following an upward revised 3.2% rebound in the previous month.
As expected, the largest single factors in the increase were lower initial claims, a longer factory workweek and higher stock prices.
There were also positive contributions from the interest rate spread, increases in building permits and nondefense capital goods new orders excluding aircraft and a rise in the ISM new orders reading.
The negative factors in the report were the leading credit index, consumer goods new orders, and the outlook for business conditions. The Conference Board said these declines, combined with a resurgence of COVID-19 cases, suggests that the US economy “will remain in recessionary territory in the near term”.