Jobless benefit rolls drop sharply to nearly 6.7M
AP Economics Writer
WASHINGTON – The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said Thursday, while new claims for benefits rose slightly.
The Labor Department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years.
The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher.
Initial claims rose by 3,000 to a seasonally adjusted 608,000 in the week ending June 13, above analysts’ expectations. The four-week average, which smooths fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.
The four-week average is at its lowest level since mid-February, further evidence that the pace of job cuts is slowing.
In another encouraging sign, the Conference Board on Tuesday said its index of leading economic indicators rose for the second consecutive month in May after seven straight declines. The index rose 1.2 percent last month and by the same in amount in the six-month period ending in May, the first time that measure has grown since April 2007.
The employment report shows that job losses are easing after companies made deep cuts earlier this year. But it’s not clear whether recipients of unemployment insurance are finding new jobs or simply using up all their benefits, which typically last 26 weeks.
“It is unlikely that new hiring has picked up in any meaningful fashion,” Joshua Shapiro, chief economist with MFR Inc., a consulting firm, wrote in a note to clients. “More probable is that long-term unemployed are starting to fall off the rolls.”
On the leading indicators, Conference Board economist Ken Goldstein said if those trends continue, a “slow recovery” should start before the end of the year, but he cautioned that the job market will take longer to rebound.
The drop in continuing jobless claims likely reflects the decline in first-time claims, meaning that fewer people are joining the rolls.
“Continuing claims … ought to be falling now given that initial claims peaked more than two months ago,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a note to clients.
The drop could also signal a slowing in the rise of the unemployment rate, economists said, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.
Still, millions of Americans are receiving unemployment compensation under an emergency federal program authorized by Congress last summer and extended by the Obama administration’s stimulus package.
About 2.4 million people received benefits under that program in the week ending May 30, an increase of more than 102,000 from the previous week. That’s in addition to the 6.7 million people receiving benefits under the 26-week program typically provided by states.
Economists are closely watching the level of first-time claims for signs the economy will recover by mid-summer, as many analysts predict.
Consumers and businesses have cut back on spending in response to the bursting of the housing bubble and the financial crisis, sending the economy into the longest recession since World War II.
Companies have cut a net total of 6 million jobs since the downturn began in December 2007, in an effort to reduce costs.
Still, job cuts are slowing. The Labor Department said employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.
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