Jobless claims were up by another 2.98 million last week, but within the bleak report, economists see a small sign of encouragement in the fact that the record number of continuing claims rose by less than half a million.
The jobless number is still shocking at 22.83 million people who have remained on unemployment benefits, but it was expected to be greater, and the prior week's count was revised down to 22.38 million. The continuing claims are for the week ending May 2, a week behind the initial claims data for last week.
"The continuing claims reading was actually quite encouraging. Continuing claims rose by less than half a million, and that was from a downwardly revised previous reading," wrote Stephen Stanley, Amherst Pierpont chief economist. "Though many of the moves were small, you may be shocked to hear that 16 states posted a decline in the number of people collecting benefits in the week ended May 2. I am very eager to see next week's reading. If the figure is not up much again, then that would be a really interesting signal."
The number of initial claims for state unemployment benefits has topped 36 million since early March, reflecting the swiftest decline in the labor force ever. Economists are now watching the continuing claims to see how many workers are returning to work due to state reopenings and the Paycheck Protection Program, which provided businesses with money so they could retain or return workers to their payrolls.
"It might not be the PPP," said Grant Thornton chief economist Diane Swonk. "We're also seeing some manufacturing plants open. Even parts of California are opening."
Swonk said claims could improve in the next week, with a much bigger drop, but there is still the issue of whether workers will be brought back to their jobs in big numbers any time soon.
The economy lost 20.5 million jobs in April, and the unemployment rate climbed to 14.7%. In the government's household survey, 78% of the workers said they believed their layoffs were temporary.
JPMorgan economists point out that while the number of people receiving benefits has continued to rise, the "incremental increase in today's report (+456,000) was the most modest weekly change since early in March."
Stanley said there were signs that Florida and New York are still catching up with a backlog of fillings, and Connecticut as well, since its filings jumped to 299,000 from 36,000 the week earlier.
"In any case, 39 states posted a 10% or more decline in initial claims last week, and 28 posted drops of 20% or more. The headline figure would have been roughly as expected if not for the CT spike. Once FL and NY get caught up and GA gets everyone in the state signed up, the weekly figures should begin to come down more substantially," he wrote.