Number of new jobless claims drops for the 11th week in a row to 1.5 million but is still higher than expected as 21 million Americans remain out of work even as economy reopens

• 1.51 million people filed new unemployment claims for the week of June 13
• It marked the 11th straight weekly decline since they peaked at nearly 7 million
• The total number of people receiving unemployment aid also fell slightly
• Nearly 21 million people are still officially classified as unemployed

Weekly jobless claims data shows 1.51 million people filed new unemployment claims for the week of June 13, a decline from the previous week but still staggeringly high as the coronavirus pandemic continues to wreak havoc on the economy. 

The latest figure from the Labor Department marked the 11th straight weekly decline in applications since they peaked at nearly 7 million in March, as the coronavirus shut down much of the economy and caused tens of millions of layoffs. The decline was much smaller, though, than in recent weeks, falling just 58,000.

The total number of people receiving unemployment aid also fell slightly, reflecting the return of many to their old jobs.

A second wave of layoffs amid weak demand and fractured supply chains is likely keeping new U.S. applications for unemployment benefits elevated, supporting views that the economy faces a long and difficult recovery from the COVID-19. 

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Thousands line up outside a temporary unemployment office established by the Kentucky Labor Cabinet at the State Capitol Annex in Frankfort, Kentucky on Wednesday

The job market appears to have begun a slow recovery. In May, employers added 2.5 million jobs, an increase that suggested that the job market has bottomed out. The unemployment rate declined from 14.7 percent to a still-high 13.3 percent.

Even with the May hiring gain, nearly 21 million people are officially classified as unemployed. And including people the government said had been erroneously categorized as employed in May and those who lost jobs but didn't look for new ones, 32.5 million people are out of work, economists estimate.   

Federal Reserve Chair Jerome Powell told lawmakers this week that 'significant uncertainty remains about the timing and strength of the recovery.' The economy fell into recession in February.

The 11th straight weekly drop pushed claims further away from a record 6.867 million in late March. Still, claims are roughly double their peak during the 2007-09 Great Recession.

'People will say claims are coming down, but for an economy that is reopening, that is a huge number,' said Steven Blitz, chief U.S. economist at TS Lombard in New York.

'The economy is losing workers and employment beyond the initial impact tied to businesses that shut down. There are a lot of industries that are getting hurt and that's starting to cascade down, that is what those numbers are showing.'

From manufacturing, retail, information technology and oil and gas production, companies have announced job cuts. State and local governments, whose budgets have been shattered by the COVID-19 fight, are also cutting jobs.

Economists expect an acceleration in layoffs when the government's Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages, runs out.

They attributed to the PPP a drop in the number of people receiving benefits after an initial week of aid from a record 24.912 million in early May. But these so-called continued claims, which are reported with a one-week lag, appear to have since stalled. According to the Reuters survey, continuing claims probably dipped to 19.8 million during the week ending June 6 from the 20.929 million in the prior week.

'There are continued layoffs across industrial sectors with some risk to white collar jobs as we move past this tranche of government aid,' said Joe Brusuelas, chief economist at RSM in New York. 'There are concerns of bankruptcies, which will force firms to reduce head count.'

Initial claims will cover the week during which the government surveyed establishments for the nonfarm payrolls component of June's employment report. But economists cautioned that claims were no longer a good predictor of job growth.

The government has expanded eligibility for unemployment benefits to include the self-employed and independent contractors who have been affected by the COVID-19 pandemic, including through lost employment, reduced hours and wages. These workers do not qualify for the regular state unemployment insurance.

They must file under the Pandemic Unemployment Assistance (PUA) program and are not included in the initial claims count. Some economists said many states were allowing workers who had been rehired, but working fewer hours for reduced pay to remain on unemployment benefits, even when they appeared on payrolls.

'Employment may rise on a net basis in June as the economy reopens and workers are recalled, but the initial claims data suggest that there is still a steady stream of new layoffs as corporations adjust to the new coronavirus reality,' said Lou Crandall, chief economist of Wrightson ICAP in Jersey City, New Jersey.