April job losses may top 20 million, weekly jobless claims report signals

• New claims for unemployment benefits jumped to a total 33.5 million for the past seven weeks, but economists are now carefully watching continuing claims for benefits, which rose more than expected.
• Continuing claims were up 4.6 million to 22.6 million, about 2.6 million more than expected.
• The continuing claims number will be an important signal on the health of the workforce and should start to decline in coming weeks as more states reopen and the economy restarts more broadly.

A woman wearing a face mask walks past a sign in front of the US Department of Labor amid the coronavirus pandemic on April 29, 2020, in Washington, DC.

Oliver Douliery | AFP | Getty Images

The number of workers who continued to collect unemployment benefits rose to a greater-than-expected 22.6 million last week, reinforcing economists' estimates for massive April job losses totaling more than 20 million.

After the shocking numbers that show 33.5 million workers have now filed new claims in the past seven weeks, markets are increasingly turning their focus to the number of workers who continue to collect unemployment benefits. That number should show how quickly workers are able to return to their jobs as the economy reopens. 

Jefferies money market economist Tom Simons said that number will not likely begin to decline until much more of the economy is reopened. The continuing claims data is lagging, as are the reports of new claims, because state unemployment offices have been overwhelmed by the record job losses in such a short period of time.

Continuing claims represent those who filed within at least the last two weeks and are still on the rolls. 

"There's definitely ... people above this number that are unemployed and are not receiving benefits," said Simons. "That's something that's hard to capture and hard to know." Simons said not all workers apply or show up on the unemployment rolls.

Continuing unemployment claims

Source: US Department of Labor

Some economists argue that some lower-paid workers may actually find they receive more pay from unemployment than their jobs because of the added federal government benefits, so continuing claims could remain more elevated until those benefits run out in July.

The number of workers filing first-time claims was 3.17 million last week, the Labor Department reported Thursday, below 3.8 million the week earlier and the fifth-straight week of decline.

Stats are through May 21's weekly jobless claims report.

In data for the previous week, the government reported continuing claims rose 4.6 million, about 2.6 million more than expected. There were 18 million continuing claims in the week earlier, ending April 18, when the government collects data for the monthly jobs report.

The monthly report will be released Friday at 8:30 a.m. ET. Economists surveyed by Dow Jones expect 21.5 million jobs were lost for the month, and the unemployment rate rising to 16% from 4.4%.

"I would actually interpret that [continuing claims] are just catching up. The anomaly was that they weren't 20 million," said Ian Lyngen, BMO's head of fixed income strategy. "It reinforces the broader narrative and takes away any surprise risk for a nonfarm payrolls that's more than 20 million."