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Rising Jobless Claims Point to Half-Million Lost Jobs in May

The weekly survey of Jobless Claims failed to indicate any turnaround in the labor market on Thursday. Initial claims for unemployment benefits were more than expected, and those continuing to receive benefits once again jumped to an all-time high. 

This week is the survey week for Nonfarm Payrolls, meaning the report has implications for the official statistics released the first week of June.

The Dept. of Labor said 631,000 people filed for first-time unemployment benefits in the week ending May 16, compared to an upwardly revised 643,000 is the previous week. Analysts were expecting claims to fall to 625k.

“It is a widely accepted view that claims will remain elevated in the coming months due to, among other things, auto sector shutdowns,” said Jennifer Lee from BMO Capital Market just before the release. “Continuing claims remain an important indicator to judge how much higher the jobless rate will climb and when the recession will end.”

Continuing Claims climbed 75k for the week ending May 9 to 6.662 million, a new all-time high. The rise indicates that those losing their jobs are finding it extremely difficult to regain employment.

Ian Pollick from TD Securities said the continuing claims figure “screams loud and clear that job destruction continues to outpace job creation.” He added, “It is safe to say that until U.S. economic activity begins to pick up, the level of continuing claims will likely continue to increase, at least in the near-term.”

Looking ahead, Joseph LaVorgna from DeutscheBank said initial claims could hit 700k in the coming weeks as shutdowns from the auto sector are captured in the data.

Translating the current report into a Nonfarm Payrolls forecast, LaVorgna said to expect another half-million jobs vanish in May.


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  • Jumbo 30 Year Fixed 4.12%
MBS Prices:
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  • 30YR FNMA 5.0 108-10 (0-02)
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  • Refinance Index 12.97%
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There was an interesting article on CNN yesterday about summer furloughs and how widespread they are going to be implemented in the coming months. It discussed how they will stretch out beyond their normal fields and encompass all types of jobs from blue collar to white. I still think the 2nd quarter earnings reports are going to be the tell tale sign of where things are heading and of course the June-September employment readings should get interesting.....I live in a state with an unemployment rate pushing 12% and climbing. I have had more borrowers lose their employment during the refinance process in the last 6 months than in the last 6 years. At what point will we have refinanced everyone left with a job at these great rates?
 

More From MND

Mortgage Rates:
  • 30 Yr FRM 3.82%
  • |
  • 15 Yr FRM 3.09%
  • |
  • Jumbo 30 Year Fixed 4.12%
MBS Prices:
  • 30YR FNMA 4.5 107-03 (0-02)
  • |
  • 30YR FNMA 5.0 108-10 (0-02)
  • |
  • 30YR FNMA 5.5 109-01 (0-02)
Recent Housing Data:
  • Mortgage Apps 9.18%
  • |
  • Refinance Index 12.97%
  • |
  • Purchase Index -2.38%
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