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Pace of US jobless claims continues to slow

The pace of new applications for US unemployment benefits continued to ease last week, falling to 1.48m as businesses emerged from coronavirus shutdowns.
Jobless claims were down from 1.54m in the previous week, according to seasonally adjusted figures released on Thursday by the US labour department. Economists anticipated a bigger drop to 1.3m.

While jobless claims have slowed in each of the past 12 weeks, the number of unemployed workers has remained near 20m. Continuing claims — the number of people actively collecting benefits — edged down again to 19.5m in the week to June 13, equivalent to 13.4 per cent of the workforce. The so-called insured unemployment rate, which was 13.9 per cent the week before, is considered an alternative measure of joblessness to the federal government’s monthly survey.

The new data comes as several southern and western states are grappling with record increases in new coronavirus cases, which threaten to slow or even reverse the reopening of their economies.

Continuing claims have only gradually receded in recent weeks, from a tally of 20.6m at the end of May and a revised 20.3m after the first week in June.

Weekly first-time jobless claims have fallen from a peak of 6.9m in late March, far exceeding previous highs after the sudden shutdown of businesses due to the pandemic. More than 47m Americans have sought unemployment benefits since the beginning of the crisis.

The federal Pandemic Unemployment Assistance programme, which extended aid to the self-employed or other individuals who would not qualify for regular unemployment compensation, tallied 728,120 new claims on an unadjusted basis last week. That was down from 770,920 a week earlier.

US Treasuries edged higher only slightly, having rallied ahead of the announcement. The benchmark 10-year note was lower by roughly 0.02 percentage points, at 0.661 per cent, while the two-year Treasury yield steadied at 0.18 per cent. Yields fall when prices rise.

The US equity market also opened lower, with the S&P 500 extending Wednesday’s 2.6 per cent drop.

“The latest initial jobless claims data paint a picture of a job market in turmoil,” said Gregory Daco, chief US economist at Oxford Economics. “While the number of continuing claims declined suggesting some workers may be getting rehired, the recovery in the labour market will be slow and fitful.”

The labour market benefited from an unexpected surge of 2.5m jobs in May, rebounding after the unprecedented loss of 20.7m jobs a month earlier. Economists project that non-farm payrolls will rise by a further 3m in June.

Other US economic reports this week have supported hopes for an economic recovery. IHS Markit’s flash composite index of the manufacturing and services sectors showed a smaller contraction in June, while business optimism for the year ahead reached its highest level in four months.

Sales of new single-family homes rose more than forecast in May, reflecting a pick-up in demand and mortgage rates that are near record lows.

And on Thursday, data on orders for durable goods, such as washing machines and cars, showed the strongest growth in May since July 2014 — up 15.8 per cent, following an 18.1 per cent drop in April. Economists had forecast a smaller gain of 10.9 per cent last month.

Core capital goods orders, a closely watched gauge of business investment that excludes defence and aircraft equipment, were up 2.3 per cent, also beating the consensus estimate of 1 per cent.

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