Initial benefit claims for unemployment insurance remained subdued in the past week, signaling a still-healthy labor market despite the outbreak of the coronavirus.
With the shutting down of entertainment venues, schools and other large gatherings picking up momentum as social distancing gains acceptance, we would expect service-sector employment to decrease in earnest as public awareness grows.
This week’s initial claims decreased to 211,000 from last week’s 216,000, though still up from the 203,000 low for this cycle that was reached in January. An increase above the five-year moving average of 242,000 claims per week would suggest a greater likelihood of the economy falling into recession.
We expect a lag in initial claims even if the economy were to take a downturn as employers reluctantly shed labor costs only as a last resort.
