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Unemployment Claims Rise to 3.2M

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Weekly initial unemployment claims came in at 1.3 million for the week ending July 4, a decline of 99,000, according to the Department of Labor. [1]

The prior week’s level was revised down by 14,000 to 1.41 million from 1.42 million. The four-week moving average was 1.43 million—a decline of 63,000 from the previous week’s revised average.

The Department reported that the advanced unemployment rate was 12.4% for the week ending June 27, which is a decline of just 0.5 percentage points from the prior week.

For the week ending June 20, there was a total of 3.29 million people claiming benefits in all programs. This is an increase of 1.4 million from the prior week. There were 1.6 people claiming benefits in all programs compared to the same week in 2019.

The highest insured unemployment rates for the week ending June 20 were in Puerto Rico (25.4%); Nevada (20.8%); Hawaii (20.7%); New York (17.1%); California (16.7%); Louisiana (16.2%); Massachusetts (15.6%); Georgia (15.1%), and Connecticut (15%).

Doug Duncan, Chief Economist, Fannie Mae, said that while the labor market has shown gradual improvement, it still faces a “significant degree of disruption” due to COVID-19.

“Despite falling from a peak of 6.9 million on March 28, initial claims are still double the highest value seen during the previous recession,” Duncan said. “Furthermore, the pace of decline appears to have slowed in recent weeks. Over the last 15 weeks, more than 46 million unemployment insurance claims have been filed.”

While First American Financials’ Deputy Chief Economist Odeta Kushi said the weekly figures came in lower than expected, the report marked the 15th consecutive week initial claims were over 1 million.

“While the weekly jobless claims were lower than expected last week, it’s too soon to celebrate,” Kushi said. “More than 40% of the country is now reversing or pausing its plans to reopen, and this could potentially result in another labor market shock.”

From a housing perspective, Kushi noted that the housing market will continue to benefit from an increase in home-buying power and the continual decline of interest rates.

On Thursday, Freddie Mac [2] announced the average rate for a 30-year fixed-rate mortgage hit another record low—coming in at 3.03%.

“The summer is heating up as record-low mortgage rates continue to spur homebuyer demand,” said Sam Khater, Freddie Mac’s Chief Economist. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.”

Danushka Nanayakkara Skillington, AVP, Forecasting & Analysis, for the National Association of Homebuilders, said demand for housing is expected to grow from the spring and summer buying seasons and low rates.

"Most of the states deemed residential construction necessary,  therefore the impact of COVID-19 was not as wide-spread as in other industries. The industry has also gained back almost half the jobs that were lost in March/April," Nanayakkara said.