First-time jobless claims declined to 547,000 for the week ending April 17 from 586,000 the week before and are well below the 4.2 million claims posted one year ago as the economy was shutting down, according to government data released Thursday.
There were no unusual increases or decreases at the state level, an important signal which implies that we are likely to observe a sustained downward move in the top line, even if the total number of people on some form of unemployment insurance remains elevated.
The trend in top-line claims is encouraging and signals that the labor market continues to recover and that investors should anticipate further declines as the recall of workers and new hiring brings down the unemployment rate from the current 6% to 4.1% by the end of the year.
Continuing claims arrived at 3.6 million and new claims for federal Pandemic Unemployment Assistance increased to 133,319. The total number of people on some form of unemployment insurance increased to 17.1 million from 16.9 million for the week ending April 3.
Over the past year, we have communicated to our clients that they should anticipate some form of scarring in the labor market, particularly among down-market workers who used to be employed by small firms.
Since roughly 37% of small firms that were open before the pandemic remain closed – revenues are down about 29% – policymakers should anticipate the number of those on unemployment insurance to remain unusually high, even as the overall rate of unemployment declines.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
