First-time filings for weekly jobless claims topped 400,000 for the second straight week, despite reports that employers can’t find workers to fill job openings.
For the week ended June 19, the number of initial jobless claims rose to 411,000, slightly better than the 418,000 who filed the week before, but far higher than the Dow Jones estimate of 380,000. The good news is that continuing claims for the week ended June 12 totaled nearly 3.39 million, versus the nearly 3.46 million expected.
The labor front might seem to be taking a turn for the worse, given the new initial unemployment claims data. The reality is that it might be too soon to tell. And, in fact, the latest Department of Labor report showed a slight decrease from the week before. On top of that, weekly reports also include data revisions for the prior week. In the case of continuing jobless claims, the 3.39 million tally was at the lowest level since March 21, 2020, and lower than the 3.534 million revised tally from the prior week.
The general view is that the reopening of state and local economies should give rise to new job openings. And at some point, discontinued federal unemployment benefits could move more people off the sidelines.
Service workers like those in restaurants and hospitality have been hard hit by the pandemic. These jobs tend to pay the lowest wages, which seems to be encouraging some to collect unemployment benefits while waiting for something better to come along.
Alaska, Iowa, Missouri and Mississippi began began cutting enhanced federal unemployment benefits on June 12. Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming initiated followed suit on June 18. The federal benefits are slated to expire in September.
Economists at Wells Fargo Securities have another take on why many are foregoing the job hunt for now. They said Covid-19 health concerns, as well as childcare responsibilities, have also constrained the labor supply. Many workers also opted out of the workforce after deciding to retire once the pandemic hit.
A report from Wells Fargo economists Sarah House and Sara Cotsakis on Thursday found that heath concerns have eased “tremendously over the past couple of months, which should make more workers comfortable returning to the job site.” They also cited an uptick of 4.5 percent in average hourly earnings over the past three months, which should incentivize some workers. Parents, meanwhile, are expected to delay going back to work until schools reopen in the fall.