U.S. jobless rolls shrink as states ease COVID restrictions

U.S. states’ jobless rolls shrank for the first time during the coronavirus pandemic in a sign people are starting to return to work, even as millions more Americans filed for unemployment benefits.

Continuing claims, which tally Americans’ ongoing benefit claims in state programs, fell to 21.1 million for the week ended May 16, Labor Department figures showed Thursday. Those data are reported with a oneweek lag. That suggests the job market is starting to rebound as businesses reopen. Analysts had expected an increase in continuing claims.

But the economic damage from the pandemic is still hitting hard throughout the country. Initial jobless claims for regular state programs totaled 2.12 million in the week ended May 23, to bring the 2 1/2-month total above 40 million. The median estimate in a Bloomberg survey of economists called for 2.1 million claims.

U.S. equities were higher Thursday, while 10-year Treasury yields were little changed.

Despite optimism in financial markets, economists expect the recovery from the pandemic to take years, and with no vaccine or significant treatment yet available, a return to normal activity is unlikely. The U.S. reached a grim milestone of 100,000 deaths from the virus on Wednesday, the highest official toll in the world.

Next week’s May jobs report is forecast to show an unemployment rate of around 20%, the highest since the Great Depression, when it peaked at an estimated 25.6%.

“The data still point to a pretty significant loss of jobs but at least the numbers are moving in the right direction,” said Aneta Markowska, chief financial economist at Jefferies Group.