Jobless claims fell to 6.61 million in the week ended April 4, the Labor Department reported Friday, slipping slightly from the prior week’s record high.
Claims declined 261,000 from the previous week’s revised level of 6.87 million, originally reported as 6.65 million.
“This was well above the consensus forecast of 5.50 million and brings the total number of filings to around 16.8 million as a result of business closures from the COVID-19 outbreak,” said Scott Anderson, chief economist at Bank of the West.
The four-week moving average rose to 4.27 million from the previous week's revised average of 2.67 million, originally reported as 2.61 million.
“The surge in claims implies the unemployment rate will easily surpass the peak rate of 10.0% during the Great Recession when the April BLS employment report is released on May 8,” Anderson said. “Claims are expected to remain very high over the next several weeks as overwhelmed processors work through a backlog of claims and more states issue shelter-at-home orders. Finally, continuing claims soared to 7.46 million for the week ending March 28, well above the Great Recession peak of 6.64 million.”
The largest increases in initial claims for the week ending March 28 were in California (+871,992), New York (+286,596), Michigan (+176,329), Florida (+154,171), Georgia (+121,680), Texas (+120,759), and New Jersey (+90,438), while the largest decreases were in Nevada (-20,356), Rhode Island (-8,047), and Minnesota (-6,678).
Meanwhile, consumer sentiment plunged in April as more businesses closed amid stay-at-home orders and job losses continued to mount.
The preliminary University of Michigan’s Consumer sentiment index fell a record 18.1 points to 71.0 in April from 89.1 in March.
“This is the largest monthly decline on record and puts the index at its lowest level since December 2011,” Anderson said. “The largest drop this month was in current conditions (-31.3 points) although expectations fell nearly 10.0 points too."
When the fall in the current conditions is combined with last month's decline, the two-month drop of 30.0 Index-points was 50% larger than the prior record.
"Buying plans fell across the board with fewer consumers believing it was a good time to purchase a vehicle, major appliance or home,” Anderson said. “Finally, consumers expect higher unemployment over the coming year, likely due to the recent surge in jobless claims.”
In contrast, the expectations index fell by 9.7 points, a substantial decline, but not nearly as steep as the record 16.5 point drop in December 1980.
“This suggests that the free-fall in confidence would have been worse were it not for the expectation that the infection and death rates from COVID-19 would soon peak and allow the economy to restart,” said Richard Curtin, the survey of consumers chief economist.
PPI, wholesale inventories sales fall
The producer price index for final demand fell 0.2% in March, seasonally adjusted, the Labor Department said.
Final demand prices declined 0.6% in February and increased 0.5 percent in January. On an unadjusted basis, the final demand index advanced 0.7% for the 12 months ended in March.
Prices for final demand less foods, energy, and trade services declined 0.2% in March, the largest decrease since falling 0.2% in October 2015. For the 12 months ended in March, the index for final demand less foods, energy, and trade services rose 1.0%.
Wholesale inventories fell 0.7% in February to $655.8 billion from January level and down 1.3% from February 2019 level, the Commerce Department reported.
Wholesale sales fell 0.8% to $500.7 billion from January level, but were up 1.1% from February 2019.
