Sticky weekly jobless claims underscore U.S. labor market distress

Other data on Thursday reinforced expectations that the economy would contract in the second quarter at its deepest pace since the Great Depression. Though orders for key capital goods rebounded in May, the increase recouped only a fraction of the steep decline in April. The goods trade deficit widened sharply last month as the pandemic continued to disrupt trade.

“All is not well in this economy,” said Chris Rupkey, chief economist at MUFG in New York. “While it counts as good news that businesses are ordering more equipment in May as the states reopened, the second wave of the pandemic may keep companies cautious in the months ahead when it comes to making new investments in the country’s future.”

Initial claims for state unemployment benefits fell 60,000 to a seasonally adjusted 1.480 million for the week ended June 20, the Labor Department said. Economists polled by Reuters had forecast 1.3 million claims in the latest week.

Claims have dropped from a record 6.867 million in late March, but progress has slowed and they are more than double their peak during the 2007-2009 Great Recession.

The weekly jobless claims report, the most timely data on the economy’s health, also showed millions continue to collect unemployment checks more than a month after many businesses resumed operating following closures in mid-March in an effort to slow the spread of COVID-19, the respiratory illness caused by the novel coronavirus.

Read here