Initial claims fall for 8th week, 10th week in millions

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Thursday’s economic data not surprisingly showed more pain, although in many cases not as much as expected by economists.

Real gross domestic product declined at an annual rate of 5.0% in the first quarter of this year, according to the preliminary estimate released by the Bureau of Economic Analysis.

The read was revised down from the 4.8% drop in GDP suggested by the advance release, and down from the 2.1% increase in the fourth quarter of 2019.

Economists polled by IFR Markets expected no change to the advance report's 4.8% drop in GDP.

The decline in first quarter GDP reflected the response to the spread of COVID-19, as governments issued stay-at-home orders in March.

“This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending,” the release said.

Fewer jobless claims
Initial jobless claims fell to a seasonally adjusted 2.123 million in the week ended May 23, from the previous week’s upwardly revised level of 2.446 million, originally reported as 2.438 million, the Labor Department said Thursday.

“The falling trajectory of still-elevated new claims for unemployment benefits is part of the constellation of readings indicating the economic benefit of diminishing stay-at-home restrictions,” said Mark Hamrick senior economic analyst for Bankrate. “The economy remains in the virtual intensive care unit. It is the tenth week with claims in the millions and the eighth straight week of declining new claims.”

Economists expected 2.100 million claims in the week.

“We’re bracing for the forthcoming May employment report widely expected to show millions more Americans lost their jobs during the month, sending the unemployment rate yet higher after April’s disastrous officially reported 14.7%,” said Hamrick.

The largest increases in initial claims for the week ending May 16 were in California (31,764), Washington (29,288), New York (24,543), Florida (2,322), and Michigan (1,549), while the largest decreases were in Georgia (65,041), New Jersey (27,324), Kentucky (22,051), Louisiana (11,580), and Pennsylvania (11,172).

“One important lesson from the Great Financial Crisis and its aftermath remaining relevant is that during both downturns and expansions, communities and individuals have different and uneven paths,” Hamrick noted. “Underscoring the otherwise random nature of loss, with its reliance on leisure and hospitality businesses, Nevada is epicenter for the nation’s highest unemployment rate topping 28%. By contrast, Connecticut boasts the lowest jobless rate among states at 7.9%, relatively little touched.”

Pending home sales
Pending home sales dropped 21.8% in April and year-over-year are down 33.8%, according to the National Association of Realtors. Sales fell 20.8% in March.

“With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases,” said Lawrence Yun, NAR chief economist.

Economists expected a 15.0% decrease.

“While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” Yun said. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

Durable goods
Durable goods orders fell 17.2% in April, the U.S. Census Bureau said on Thursday, the third decline in the past four months. In March, orders fell 16.6%.

Economists expected an 18.5%. decline.

Excluding transportation, orders decreased 7.4% in the month, after a 1.7% drop a month earlier. Excluding defense, orders fell 16.2% in April, after a 17.4% decline in March.

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