U.S. Jobless Claims Edge Down To 1.3M In July 4 Week -- 2nd Update

By Eric Morath and Kim Mackrael

Initial unemployment claims edged down to 1.3 million in the latest week and workers receiving benefits eased slightly to 18.1 million, signs the labor market continues to heal.

The number of new applications for jobless benefits fell by a seasonally adjusted 99,000 for the week ended July 4, the Labor Department reported Thursday. That extends a trend of gradual declines from a peak of 6.9 million in mid-March, when the coronavirus pandemic and mandated business closures shut down swaths of the U.S. economy. Still, last week's level was well above the highest week on record before this year, which was 695,000 in 1982.

The number of Americans receiving unemployment benefits fell for the week ended June 27 to the lowest level since mid-April. Those so-called continuing claims are reported with a week lag. The modest easing of the number of unemployment rolls suggests new layoffs are being offset by hiring and recalling of workers.

Employers added a combined 7.5 million jobs in May and June after shedding 21 million jobs in March and April, separate Labor Department data showed.

Claims fell in most states last week, including California and Florida, on a non-seasonally-adjusted basis, the Labor Department said. Claims did rise by 20,000 in Texas.

While Thursday's report is being watched for signs of how a rising level of Covid-19 cases in several large states is affecting the labor market, it may not give a clear view.

The Independence Day holiday, observed July 3, reduced the number of business days applicants had to file. It isn't required for workers to seek benefits the same week they are laid off. Also, the seasonally adjusted data tend to be volatile around major holidays, because the timing differs slightly from year to year.

Whether that recent rate of job creation, and relatively lower pace of layoffs, can continue is in doubt because coronavirus infections are causing state authorities to recalibrate reopening plans and creating renewed uncertainty for many businesses and consumers.

Alyssa D'Angola, a 35-year-old bartender in Austin, Texas, lost her job at the Golden Goose for a second time in late June when the state ordered bars to close to stem a resurgence in coronavirus cases. She had only been back at work for five weeks when the second closure began.

Ms. D'Angola said she was able to delay her mortgage payments beginning in the spring and is receiving unemployment benefits, including a $600 weekly top up from the federal government. That extra benefit is set to expire at the end of this month. "When all this stuff runs out, I don't know where I'm going to be," she said.

Many economists, including Bradley Hardy at American University in Washington, D.C., expect overall employment growth will continue, but at a significantly slower pace than over the past two months.

"When you see the rising number of cases," he said, "you have to ask to what degree will that tamp down foot traffic and spending, and ultimately employment."

Several large employers have signaled future pullbacks.

United Airlines Holdings Inc. told 36,000 employees, about half its U.S. workforce, on Wednesday that they could be furloughed from Oct. 1 because of the pandemic-driven slump in passenger demand. Clothing retailer Brooks Brothers, which filed for bankruptcy this week, has permanently closed 50 stores due to the pandemic. McDonald's Corp. and Apple Inc. are among the companies that have halted plans to reopen stores or announced new temporary closures.

Still, some businesses are seeing a marked pick up and are recalling workers this summer.

Geoff Wolpert, owner of the Peddler Steakhouse and the Park Grill restaurants in tourism hub Gatlinburg, Tenn., laid off 138 of his 147 employees in late March, when the restaurants temporarily closed. About two-thirds of those workers were able to apply for unemployment benefits, he said. Mr. Wolpert also emptied the restaurants' freezers, making 180 seven-day food boxes for staff members.

The two restaurants reopened a week apart in late May. "I'm going to want to remember those for the rest of my life," he said of the reopening days. All employees were recalled, though 16 chose not to return.

After reopening, sales at the restaurants were initially half the previous year's amount, but in recent weeks, revenue returned to the 2019 level, he said.

The bulk of hiring in recent months has come from businesses recalling workers to their former jobs, said Joaquin Alfredo-Angel Rubalcaba, an economist at the University of North Carolina. With all states at least partially lifting restrictions imposed this spring to limit the spread of Covid-19, he expects rehiring will contribute less to overall employment gains in the coming months.

Matching unemployed workers to new jobs will be a slower process, Mr. Rubalcaba said. Firms are likely to face increased costs for employee health benefits and unemployment insurance, and remain uncertain about the path of the economy, he said.

"We're attempting to confront a public-health crisis, but haven't been successful in doing that," Mr. Rubalcaba said. "That makes it hard to have a lot of confidence that the economy will continue to get better."

--Justin Baer contributed to this article.

Write to Eric Morath at [e-mail] and Kim Mackrael at [e-mail]