Jobless claims spotlight damage from virus

The number of laid-off workers seeking U.S. unemployment aid barely fell last week, and the reopening of small businesses has leveled off — evidence that the job market’s gains may have stalled just as a surge in coronavirus cases is endangering an economic recovery.

The government also reported Thursday that the economy contracted at a 5% annual rate in the first three months of the year, a further sign of the damage being inflicted by the viral pandemic. The economy is expected to shrink at a roughly 30% rate in the current quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948. Economists do expect a snapback in the second half of the year, though not enough to reverse all the damage.

The number of laid-off workers who applied for unemployment benefits declined slightly to 1.48 million last week. It was the 12th straight drop. Still, an additional 700,000 people applied for benefits under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.

Combining those figures, overall applications for jobless aid have edged down just 3% in the past two weeks — a much slower pace than in late April and May.

“There has been no real decline in weekly claims the past two weeks,” said Julia Pollak, a labor economist at ZipRecruiter. “There has also been no real increase in job openings. What seemed like encouraging signs of recovery in May largely stalled in June.”

A separate government report Thursday said orders for durable goods unexpectedly jumped nearly 16% in May, reflecting a

rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding

the volatile transportation category, so-called core orders rose only modestly, reflecting still-sluggish business investment.

The virus is intensifying its squeeze on companies across the economy.

Disney is postponing the scheduled mid-July reopening

of its Southern California theme parks until it receives guidelines from the state. Macy’s is cutting nearly 4,000 corporate jobs — roughly 3% of its workforce — in response to financial strain caused by the virus. Apple announced late Wednesday that it would reclose

seven of its stores in the Houston area, which is suffering a spike in cases. Last week, it said it would re-close 11 other stores in four states.

In states that are suffering spikes in COVID-19 cases, small businesses are closing again and cutting some jobs.