Around 1.3 million people filed for first-time unemployment benefits last week, the 14th straight week of declines, according to new figures from the Department of Labor.
Thursday’s data is further indication that despite historic levels of joblessness, the labor market is slowly recovering from months of shutdowns put in place to halt the spread of the coronavirus. More than 48 million people have now filed for unemployment benefits for the first time in the past 16 weeks.
Continuing claims data, which captures the number of people collecting ongoing benefits, fell sharply to just over 18 million, down by almost 700,000.
The DOL data comes just one week after a blowout monthly jobs report that showed the U.S. economy gained a whopping 4.8 million jobs in the month of June, bringing the unemployment rate down to 11.1 percent. While that is an improvement on May’s 13.3 percent, it is still a far cry from February’s pre-pandemic unemployment rate of just 3.5 percent.
The bulk of the June job gains were businesses rehiring employees who had been furloughed or laid off. With more small businesses and restaurants reopening across the nation, customers are venturing out of their homes to dine and shop, supporting the labor market’s slow healing process.
However, several large companies have indicated significant pullbacks. On Wednesday, United Airlines warned of “involuntary furloughs” that would come in early fall. The beleaguered airline said it had notified one-third of its work force, including 15,000 flight attendants, 5,000 mechanics, and 2,250 pilots, that there could be layoffs beginning Oct. 1. With travel demand down 75 percent year on year, fewer flights are necessary, and therefore less staff.
Also on Wednesday, storied suit outfitter Brooks Brothers filed for bankruptcy protection after 202 years in business. The company employs around 4,000 workers, and joins a growing list of retailers whose business models are faltering as thousands of office workers stay home in their sweatpants. J.Crew, Neiman Marcus and JCPenney have all filed for bankruptcy protection since the coronavirus shut down the economy in March.
In light of the recent spike in coronavirus cases in mostly southern states, economists are warning that much of the joblessness could become permanent.
“As the COVID-19 outbreak has recently intensified in some states, hopes for an accelerated, sustained and successful reopening of the economy have hit roadblocks,” said Mark Hamrick, Bankrate.com’s senior economic analyst. “This raises concern about the economy’s rebound.”
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said on Tuesday, “There is a real sense that this might go on longer than we had hoped and we had expected and we had planned for. People are getting nervous again. Business leaders are getting worried. Consumers are getting worried.”
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