US Initial Jobless Claims Fall Week-Over-Week, Coronavirus 'Continues To Weigh On Businesses Of All Sizes'

New initial U.S. jobless claims fell week-over-week from 2.13 million to 1.88 million in the final week of May.

Continuing jobless claims rose from 20.84 million to 21.49 million, according to statistics released Thursday by the federal government. 

Economists were expecting 1.8 million new jobless claims and 20.05 million continuing claims. 

The numbers cut the four-week average for jobless claims from 2.61 million to about 2.28 million.

The Sectors Where It Hurts

A day before the jobless numbers came out, ADP released a report suggesting that private payrolls fell by just 2.76 million in May, representing outperformance over economist forecasts (8.75 million) and April’s record plunge (19.6 million).

“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” Ahu Yildirmaz, co-head of the ADP Research Institute, told CNBC.

“While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

ADP found the deepest job cuts in large businesses, which represented more than 1.6 million layoffs. Midsize companies lost 722,000, while small firms cut 435,000.

Manufacturing alone recorded 719,000 job losses, while professional and business services lost 250,000, financial services 196,000, education and health services 168,000 and leisure and hospitality 105,000.

Education (166,000) and administrative and support services (40,000) recorded gains.

“Those jobs are not going to come back if the federal government doesn’t do the things it needs to do to stimulate the economy, so that the demand and confidence is going to be there, so that those businesses will need to call workers back,” Heidi Shierholz, senior economist at the progressive Economic Policy Institute and a former chief economist at the Labor Department, told the Associated Press.

What's Next 

The unemployment rate for the month of May will be released Friday. The consensus expectation is for the rate to rise from 14.7% to 19.5%.

“It is possible that ADP’s numbers are unrepresentative for May, or that the model is unreliable given the step-shift in the state of the labor market, but the safest approach probably is to assume that Friday’s official payroll numbers will be much less bad than the current consensus, -8,000K. And June payrolls likely will increase substantially,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told MarketWatch.

Other Econ Figures

The Bureau of Labor Statistics also reported Thursday that first-quarter nonfarm productivity fell 0.9% quarter-over-quarter compared to the previous period’s 1.2% rise. For the month of April, U.S. imports exceeded exports by $49.4 billion, according to the Census Bureau.

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