Millions more Americans file for unemployment benefits; productivity tanks

Washington (Reuters): Millions more Americans sought unemployment benefits last week, suggesting layoffs broadened from consumer-facing industries to other segments of the economy and could remain elevated even as many parts of the country start to reopen.

The deepening economic crisis triggered by nationwide lockdowns to slow the spread of the novel coronavirus was underscored by other data on Thursday showing worker productivity fell at its fastest pace in more than four years in the first quarter amid the largest drop in hours since 2009.

The reports support economists’ expectations of a slow rebound in the economy after gross domestic product slumped in the first quarter at the steepest pace since the 2007-09 Great Recession. The economic rout could hurt President Donald Trump’s bid for a second term in the White House in November’s election.

Trump wants the country to reopen and restrictions imposed by states and local governments to control the spread of COVID-19, the respiratory illness caused by the virus, eased.

“The US labour market is in the worst position since the Great Depression and is unlikely to improve sustainably anytime soon,” said Ron Temple, head of US equities at Lazard Asset Management in New York. “Premature efforts to reopen economies undermine our progress in controlling the pandemic and risk extending the duration of the downturn.”

Initial jobless claims for state unemployment benefits totalled a seasonally adjusted 3.169 million for the week ended May 2. Data for the prior week was revised to show 7,000 more applications received than previously reported, taking the tally for that period to 3.846 million. Economists polled by Reuters had forecast 3.0 million claims for the latest week.

It was the fifth straight weekly decrease in applications since the record 6.867 million in the week ended March 28. Florida accounted for about 40% of the decline in claims last week, which some economists attributed to difficulties processing applications. There were also big drops in filings in Georgia, Pennsylvania, Alabama, New York, and Washington state.

Still, the latest numbers lifted to about 33.5 million the number of people who have filed claims for unemployment benefits since March 21, equivalent to roughly one out of every five workers losing their job in just over a month.