Coronavirus: US jobless claims soar to new record of 6.6m
More than 6.6m Americans filed for unemployment benefits for the first time last week, figures have shown, eclipsing the previous record of 3.3m jobless claims set the previous week as coronavirus crashes the US economy.
The US jobless claims figure from the Department of Labor was almost twice as bad as the 3.5m analysts had been expecting. The reading even beat the highest prediction of 5.3m made in a Reuters poll.
“Today’s jobless claims of 6.6m is ten times the pre-Covid record of 665,000 experienced in 2009,” said Ronald Temple, Lazard’s head of US equity.
He said it suggests “the unemployment rate reported in a month will exceed 10 per cent”.
Mohamed El-Erian, chief economic adviser at Allianz, said the US jobless claims figures were “another indication of the virus’s devastating immediate and longer-term effects”.
The surge in US jobless claims shows that the labour market is imploding as coronavirus spreads.
US economy in a tailspin
Lockdown measures have caused businesses to close, supply chains to break, and consumers to self-quarantine. This has sent the world’s largest economy into a tailspin.
Some of the biggest increases in jobless claims were in Pennsylvania and California. Both have implemented measures to keep people at home to stop the spread of coronavirus.
Bank of America today predicted the US economy is set to shrink at an annualised rate of 30 per cent in the second quarter of the year.
Michelle Meyer, economist at Bank of America, said: “The shock is unlikely anything we have experienced before with part of the economy effectively put into an induced coma.
“The pain is sudden and acute,” she added.
She said she thinks the recovery will be slow “as many workers will be displaced and businesses adapt to a period of lost revenue”.
‘Incomprehensible’ rise in US jobless claims
US stock index futures pared some of their gains following the jobless claims data. They remained in positive territory, however.
Britain’s FTSE 100 fell into the red, and was last down 0.2 per cent. The pan-European Stoxx 600 was down 0.4 per cent.
Economists reacted with dismay to the figures. Gregory Daco, chief US economist at Oxford Economics said the 6.6m reading was “incomprehensible”. But he said it “may be the new normal for a while”.
Sebastien Clements, currency analyst at trading platform OFX, said: “Last week’s US jobless claims figure came in at a staggering 3.3m, but it now seems this was just the tip of the iceberg.”
“A deadly blend of supply-side chaos combined with… a drastic decline in demand for goods.”