Getting ready for the June NFP release, which will probably shed some light on the striking employment gains in May, we continue to keep tab on the behavior of more frequent labor market indicators – initial and continuing unemployment claims in the US. For the fourth consecutive week, a drop in layoffs has been more “sticky” than expected:

Weekly rise of layoffs in June appears to be consistently higher than the forecast. But in time of permanent monetary and fiscal stimulus, bad economic news are good news for the market: the weaker is recovery the more likely is extension of the lost income coverage scheme which expires at the end of July.

Continuing claims declined from 20.3M to 19.5M but WoW changes are not quite consistent with the story of massive rebound after the reopening:

Still, declining number is a good signal because it shows that people are returning to work. However, actual number can be higher this week due to a reporting feature of some states: for example, Florida and California send the data every two weeks and there was no data on unemployment claims this week.

As of June 6, the number of claims for all income insurance programs (unemployment benefits, pandemic payments, etc.) amounted to about 30.5 million. The first important requirement to be eligible for receiving the social payments is that a person have to lose a job during pandemic. However, in order to take into account constraints on job search opportunities arising from the pandemic, the government relaxed another important condition – the need to look for a job. Recall that for a person to be unemployed two conditions must be met – lose a job and be in active search for a work. As a result, a large part of unemployed can be out of reach of BLS precisely because of the flaw in accounting, that’s why the number of people who receive benefits can be more accurate measure of the unemployed than official BLS unemployment estimate. Currently it is 13.3%, while 30.5M claims is about 20% of the workforce.

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