by Calculated Risk on 7/23/2020 09:50:00 AM

A few comments:

On a monthly basis, most analysts focus on initial unemployment claims for the BLS reference week of the employment report.  For July, the BLS reference week was July 12th through the 18th, and initial claims for that week were released today.

Note that a couple of states have not released Pandemic Unemployment Assistance (PUA) claims this week, so the number of PUA claims is too low. However, there may also be processing delays that are impacting the numbers.

Continued claims decreased last week to 16,197,000 (SA) from 17,304,000 (SA) the previous week. Continued claims are down 8.7 million from the peak, suggesting a large number of people have returned to their jobs (as the employment report showed).  However, continued claims NSA increased to 17,188,772 from 16,410,059 the previous week - and the seasonal adjustment may be off this year due to the pandemic.

Continued claims are released with a one week lag, so continued claims for the reference week will be released next week.   The decrease in continued claims does not suggest a sharp drop in July employment.

The following graph shows regular initial unemployment claims (blue) and PUA claims (red) since early February.

Click on graph for larger image.

This was the 18th consecutive week with extraordinarily high initial claims.

It is possible that we are starting to see some layoffs associated with the end of some early Payroll Protection Plan (PPP) participants.

We are probably seeing some layoffs in states with more COVID cases.

Note that these states don't have to lockdown to see a decline in economic activity. As Merrill Lynch economists noted: "Most of the slowdown occurred due to voluntary social distancing rather than lockdown policies."