UI Claims Fall as CARES Act Benefits Expire


August 6, 2020

By Daniel Zhao

Unemployment insurance (UI) claims fell last week in a sign that layoffs may be abating even as other economic indicators like job openings on Glassdoor point to a stalling recovery. The decrease in claims is a positive sign that the economic recovery may be progressing cautiously.

Initial UI claims fell on a seasonally adjusted basis, dropping to 1.19 million from 1.44 million, according to the latest figures from the Department of Labor for the week ending August 1. This reverses an uptick in seasonally adjusted claims in the last few weeks, driven by idiosyncrasies in the seasonal adjustment in July.  Non-seasonally adjusted initial claims continued to decline, dropping to 984,192, their first drop below 1 million since the crisis began and the fastest rate of improvement since May.

Crucially, last week was also the last calendar week before the expiration of the expanded $600/week benefits, though those benefits had effectively expired the week before. It’s unclear whether the expiration of those benefits is also changing claimant behavior. The increased uncertainty around whether the benefits would continue, be reduced or expire completely may be causing some claimants to hold off on claiming UI until more information is available.

Pandemic Unemployment Assistance (PUA) initial claims dropped to 655,707, non-seasonally adjusted. PUA and UI claims combined have fallen over the last three weeks and have dropped under 2 million for the first time in the crisis. However, reporting issues continue to plague the PUA program as several states continue to improbably report zero claims.

Continuing claims for UI fell to 16.1 million for the week ending July 25, 2020, on a seasonally adjusted basis, and dropping below 16 million on a non-seasonally adjusted basis for the first time since April. The continuing claims data shows a modest improvement in the labor market since late June, consistent with data showing a cautiously progressing labor market recovery.

The July jobs report to be released tomorrow is widely expected to show a slowing recovery. While UI claims data is not directly comparable to the unemployment data from the jobs report, there’s been a clear slowdown in the rate of recovery in early July. The sluggish rate of improvement is especially concerning given the eye-watering level of claims we continue to hit every week.

Trend in UI Claims Between Jobs Report Reference Weeks

May 2020June 2020July 2020May → JuneJune → July
Week Ending 5/16Week Ending 6/13Week Ending 7/18
UI Initial Claims (NSA)2,181,6401,463,3631,376,925-718,277-86,438
PUA Initial Claims (NSA)1,277,401773,666960,229-503,735186,563
UI + PUA Initial Claims (NSA)3,459,0412,237,0292,337,154-1,222,012100,125
Continuing Claims (NSA)18,861,42817,654,45016,815,199-1,206,978-839,251

The labor market data released this week comes at a critical juncture as policymakers negotiate the next financial relief package. The data from the past month has offered a stark reminder that the recovery is frail and an escalating public health crisis could easily erase gains. This week’s official UI claims and jobs reports join the bevy of high-frequency indicators pointing to a fragile recovery, making the urgency of the situation clear. A recovery stuck in the doldrums risks cementing the negative impacts of the crisis and prolonging a full recovery.

To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.