For the first time in 20 weeks, the number of new weekly unemployment insurance claims has dropped below 1 million. It’s been a long march to reach this milestone, which although significant, is not much comfort to the 963,000 folks who filed those claims in need of assistance.
US economic improvement remains much slower than in earlier months
While there’s a lot of uncertainty about what the future will bring, there is one trend that is clear: the further removed we get from “the bottom” of economic activity during the early days of the COVID-19 pandemic – which by our measure is the week ending April 12th, when the total volume of shift work in the hourly workforce reached its lowest levels – the slower the improvements are starting to come.
For example, the number of new weekly unemployment insurance claims filed each week has only dropped by about 500,000 since late June, from approximately 1.43 million per week to today’s report of 963,000.
Similarly, weekly average shift growth has paced just 0.7 percent in July and is pacing just 0.5 percent in August. That’s a stark contrast to the 2.7 percent weekly average growth the US jobs economy was experiencing in May, when the volume of weekly unemployment insurance claims was dropping by hundreds of thousands each week.
What do these unemployment and jobs recovery trends mean for the future?
What all of this tells me is that businesses are very much still in the process of recalling furloughed employees, slowly. However, there has not been enough sustained economic growth to facilitate the new hiring needed to get back to the staffing levels that were present in early 2020.
To put the road to recovery in perspective, during the height of the 2009 recession, weekly unemployment insurance claims reached approximately 650,000 per week. It was similar in 1982’s recession as well. Right now, we’re more than 300,000 claims per week above that, reinforcing that even though we’ve made great strides in the jobs recovery, the U.S. is still mired the most troubling unemployment scenario of the last 50 years.
The next four weeks leading up to Labor Day will be telling as we anticipate the long-term trajectory of labor recovery, particularly as the PPP funding runs dry and historically slower summer months come to a close.
To learn more about the state of US jobs recovery, including how each U.S. region is recovering, read this week’s Kronos Workforce Activity Update for Aug. 3-9.