Initial jobless claims surged, as expected, hitting an all-time high of a seasonally adjusted 3.283 million in the week ended March 21, as the impacts of the COVID-19 closures showed in the numbers, the Labor Department said Thursday.
The previous high for claims was 695,000 in October 1982.
In the release, DOL said nearly every state commented about the impact of the disease on claims.
In the week ended March 14, there were 282,000 claims, revised up by 1,000 from the initial read.
The number of continuing claims jumped to 1.803 million in the week ended March 14 from 1.702 million a week earlier.
“The data is unsettling,” said Nicole Sahin, CEO of Globalization Partners. “Businesses are hunkering down and sheltering in place. But there's value in keeping perspective. Countries in Asia and other economies are beginning to recover — and with record economic stimulus to support U.S. companies and their employees, it's only a matter of time before we see companies looking again to stimulate growth."
She doesn’t expect "another Great Recession," since “business fundamentals are strong” and the government plans “massive economic stimulus.”
Starting dates for new employees have been “pushed back two months,” Sahin said, and some firms responded by “shifting resources away from worst-hit areas and utilizing people in other parts of America — or moving to different markets — Asia is picking up a lot now.”
“Yes, the surge in jobless claims was widely expected, but these numbers are still startling,” said Berenberg Capital Markets U.S. Economist Roiana Reid.
For perspective, she said, in the Great Recession the highest level of claims in a week was 665,000. Also, this was the first time initial claims were higher than continuing claims.
“Our baseline forecast is for the unemployment rate to increase from 3.5% to 12% in Q2 and fall to 8% by year-end,” she said. “We expect some of this stunning loss of jobs to be reversed following the acute stages of the pandemic crisis, but it will take some time for employment to return to pre-crisis levels.”
Because of the timing, next week’s March employment report “will not fully reflect the deterioration in labor market conditions.”
And the numbers could get uglier. “Since the U.S. workforce is approximately 160 million, it should not surprise anyone if over the next several weeks filings for unemployment total reaches 16 million jobless claims,” said Edward Moya, senior market analyst, New York, at OANDA.
In other economic data, gross domestic product grew at a 2.1% pace in the fourth quarter, the Commerce Department reported.
With parts of the nation in a lock down and many non-essential business shuttered, economists expect the next read of GDP to show a large contraction, perhaps as much as 30%.
The Federal Reserve Bank of Kansas City manufacturing survey’s composite index contracted to negative 17 in March from positive 5 in February.
“Regional factory activity contracted sharply in March as firms were negatively impacted by COVID-19,” said Chad Wilkerson, vice president and economist at the Bank. “Many firms indicated overall demand and sales have slowed dramatically, with capital investments being put on hold. Around 60% of manufacturers faced delayed payments from customers and 54% had concerns about cash availability.”
Production, volume of shipments, and volume of new orders all fell into negative territory in the month compared to last month, as did backlog of orders, number of employees, average workweek, price received for finished product, prices paid for raw materials and new orders for exports.
The expectations for six months from now were also mostly negative, with the composite index, production, volume of shipments and volume of new orders all showing contraction.
