With millions laid off in the March 21 week due to business shutdowns, initial jobless claims surged to a record high level in Thursday’s data, and are likely to go further as displaced workers sign up for benefits and any backlog is worked down.
The level of initial claims surged by 3.001 million to 3.283 million from a 282,000 level in the previous week. Some forecasts were as high as a 3 million level for the current week.
By contrast, the next highest weekly level was 695,000 in August 1982. And the highest initial claims level reached during the Great Recession was 665,000 in March 2009.
The not-seasonally-adjusted total for the March 21 week was 2,898,450, up from the previous week’s 251,416. Pennsylvania was the state with biggest total, 378,908. California was second with 186,109.
And this is just the start.
Federal stimulus legislation would extend increased benefits to workers, while many states have worked to make filing for benefits easier and more appealing by waiving the need to look for new employment. These are similar measures to those enacted during the Great Recession.
These actions, along with the realisation that these layoffs may be long-term, and in some cases permanent, will lead to heightened initial claims filings for the next several weeks. And this comes only seven weeks after a 50-year low in claims in early-February.
The Labor Department cited service sectors such as food services and accommodations as the key factors in the surge, but noted that several other sectors also saw gains, as would be expected. The state breakdown for the current week, which is not seasonally adjusted, showed gains in excess of 100,000 claims in a number of states.
Continuing claims, for two weeks ago and so missing the monumental surge, rose by 101,000 to 1.803 million in the March 14 employment survey week. With layoffs likely to be long-term, continuing claims will continue to rise in the coming weeks and remain elevated until businesses reopen.
The level of continuing claims was up 110,000 from the 1.693 million level in the February 15 survey week, a substantial negative factor for March payrolls when they are released next week. However, most of the COVID-19 impact came after the March survey week, so it is likely that the real impact won’t be seen until the April payrolls report.